When I was in college I interned for Lehman Brothers on their soft
dollar desk. Soft dollars are basically barter agreements where an
investment bank will pay for financial "services/products" for an
investment company in exchange for trades (usually at a fixed ratio)
down the line.
For example, Lehman would pay for Fidelity's Bloomberg cost if Fidelity
traded with Lehman at ~1.5 the Bloomberg cost. You can consider
it a quid pro quo. The problem is "services/products" are pretty
broad. I seem to remember Lehman paying a lot of country club
memberships and "social club" costs. It looks like Fidelity is cracking down on this practice.
Times are changing!!!
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