
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, October 4, 1995                   TAG: 9510040057
SECTION: BUSINESS                    PAGE: B-5   EDITION: METRO 
SOURCE: 
DATELINE: NEW YORK                                LENGTH: Short

BONUS COMMISSIONS A THING OF THE PAST

Dean Witter Reynolds Inc. on Tuesday became the last major Wall Street firm to abandon the controversial practice of paying brokers extra commissions for peddling the firm's own mutual funds to investors.

Once widely accepted on Wall Street, the industry system scrapped by the nation's third-largest brokerage company has come under fire for enticing salespeople into selling financial products that may be unsuitable for some investors.

``It really reduces the possibility for a conflict of interest,'' said Barbara Gertz, a spokeswoman for Morningstar Inc., a Chicago-based fund research company.

``The broker can then focus on which fund actually suits the investors' needs, rather than be tempted by the extra commission,'' she said.

The brokerage unit of Dean Witter, Discover & Co., said it changed the policy as part of a broader reform of compensation practices recommended by an industry panel last spring.

Among other changes, Dean Witter said it would end the practice of paying upfront bonuses to lure brokers from rival companies. In addition, it would no longer recruit brokers by offering them higher commissions than paid to its existing brokers.

However, it said it would only abandon the higher commissions if the change was matched by rival firms.

- Associated Press

by CNB