Morgan Stanley's asset management arm will forego using soft dollars. Mitchell Merin, president of the unit, revealed the decision in a letter sent to the SEC on Monday, reports Dow Jones Newswires. The firm had used soft-dollar commissions to pay for third-party research.

The letter is expected to be circulated to brokers at Morgan Stanley on Wednesday. In the letter Merin also disclosed that Morgan Stanley is creating an "office of the funds" in order to "enhance transparency" and "facilitate communication between the board and management."

Morgan Stanley paid a $50 million to the SEC in late 2003 to settle claims that it failed to adequately inform investors that it accepted revenue sharing from funds on its premiere recommended list and that it used directed commissions. Since that time it has been enacting reforms in its practices.

In Monday's letter, Merin also said Morgan Stanley will not direct brokerage commissions to other securities firms in connection with sales of its own funds. Merin wrote that he favors the SEC's proposal of a 4 P.M. trading cutoff.  

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