Capital Institutional Services Supports SEC Recommendations For Improved Disclosure on Soft Dollars.

DALLAS--(BUSINESS WIRE)--Sept. 22, 1998--Capital Institutional Services, Inc., a leading institutional brokerage firm, issued the following statement today in response to the release of a report on soft dollar practices by the Securities and Exchange Commission (SEC).

Statement by Kristi Potts, CIS senior vice president and director of compliance:

CIS Supports SEC Recommendations

CIS fully supports the recommendations of the SEC report, which called for improved disclosure to institutional investors regarding the use of their commission fees by investment managers and advisers to purchase research services under "soft dollar" arrangements.

As an agency block-trading firm, CIS is committed to providing a broad range of services and expertise to facilitate the trading process for institutional investors, including the use of soft dollar arrangements when appropriate.

Focus on Best Practices for Soft Dollars

Our firm has a long-standing focus on helping our clients understand and apply emerging standards of best practice regarding soft dollars - including rules about disclosure. We plan to work closely with our clients going forward to help them identify all the practical implications of the SEC recommendations and translate those new standards into operational change wherever necessary. Specifically, we plan to help our clients address the need, identified by the SEC, for an improved definition of "research" in the areas of electronics and telecommunications.

CIS, as a member of the Alliance In Support of Independent Research (The Alliance) and the Securities Industry Association (SIA), is in support of broker-dealer best practices as defined by these organizations. CIS believes that even though current law does not impose direct obligations on the broker-dealers concerning Section 28(e) - the "safe harbor" for those who use soft dollars to purchase investment research - broker-dealers should be aware of the possibility of conduct which might potentially violate fiduciary duty or antifraud provisions of the federal securities laws.

Under the principles of best practices, CIS makes reasonable inquiries to determine that services being paid by CIS in soft-dollar arrangements fall within the definition of brokerage and research as defined by Section 28(e). CIS maintains records of the services provided for each client, and the CIS statements contain full disclosure of the services paid. Concerning mixed-use, CIS will advise the fiduciary when an allocation may be needed, and urge fiduciaries to periodically review the brokerage allocation. CIS also, under certain circumstances, may remind the fiduciary that a disclosure obligation exists with respect to commission arrangements and brokerage allocation practices.

Assistance with Compliance Issues

The CIS compliance department offers customers regulatory assistance in dealing with third-party research payments. CIS maintains written procedures concerning soft dollar arrangements and has systems in place to ensure compliance with the legal and regulatory environment. Adhering to best practices, maintaining the highest ethical standards and providing the most favorable execution to our customers is first and foremost.

Note to Editors: Based in Dallas, Texas, Capital Institutional Services (CIS) is an institutional brokerage firm which has provided professional agency trading and independent investment research products to asset managers and plan sponsors since 1977. CIS provides trading in listed and over-the-counter U.S. equities, U.S. government, agency, corporate, mortgage, and municipal bonds, and international equities to over 700 institutional clients throughout North America. The firm is a member of the New York Stock Exchange, the American Stock Exchange and the National Association of Securities Dealers and maintains offices in Dallas and New York City.