Ethics – Soft dollars

A question from the candidate resources. I get it’s about soft dollars but the way it’s drafted, I am unable to wrap my head around the story. Can someone explain the story/context in a relatively simpler manner and what & why a particular option is the answer?

Carter works for Invest Today, a local asset management firm. A broker that provides Carter with proprietary research through client brokerage arrangements is offering a new trading service. The broker is offering low-fee, execution-only trades to complement its traditional full-service, execution-and-research trades. To entice Carter and other asset managers to send additional business its way, the broker will apply the commissions paid on the new service toward satisfying the brokerage commitment of the prior full-service arrangements. Carter has always been satisfied with the execution provided on the full-service trades, and the new low-fee trades are comparable to the fees of other brokers currently used for the accounts that prohibit soft dollar arrangements.

A. Carter can trade for his accounts that prohibit soft dollar arrangements under the new low-fee trading scheme.

B. Carter cannot use the new trading scheme because the commissions are prohibited by the soft dollar restrictions of the accounts.

C. Carter should trade only through the new low-fee scheme and should increase his trading volume to meet his required commission commitment.