Investor education is set to get 6% of the total settlement, approximately $85 million, over the next five years, pending formal SEC and court approval.
The money from the brokerage houses, including Credit Suisse First Boston, Goldman Sachs, Morgan Stanley, Salomon Smith Barney, Merrill Lynch & CO and five others, will go into a fund administered by a panel of experts and overseen by a court.
The Securities and Exchange Commission (SEC) said it is still developing plans for how the funds will be allocated, but indicated that grants will be awarded to deserving teaching programs, according to Reuters.
However, the SEC stressed that no sales pitches will be allowed for any education associated with the settlement. The SEC said they are determined to see that the money will help bridge a gap between the increased activity in the stock market and amount of education those investing currently have.
“I saw this an opportunity to improve the financial literacy landscape,” said SEC Commissioner Cynthia Glassman, who lobbied for part of the settlement to go towards education dollars.
“There are two important components to investing,” Glassman said. “One is getting clear and accurate information … The other is knowing what to do with that information.”Currently the SEC employs just three people committed to education, who produce free publications for teachers, parents and students on saving and investing.