Category Archives: Political Contributions

SEC Unanimously Agrees to Ban Pay-to-Play Practices by Investment Advisers

July 04, 2010

On June 30, 2010, the United States Securities and Exchange Commission (“SEC”) unanimously adopted Rule 206(4)-5 under the Investment Advisers Act of 1940 which is designed to curtail “pay to play” practices by registered investment advisers.  (Click here for a link to the SEC press release).  “Pay to play” is the practice of making contributions to public officials in exchange for the award of pension management contracts.  The SEC believes that these practices favor large investment advisors over smaller ones, reward political connections rather than investment skill, and give consumers sub par performances for superior prices.  Therefore, the SEC adopted Rule 206(4)-5 which is designed to eliminate the pay to play practice and to level the field for investment advisers so that management contracts are awarded based upon investment skill and quality of service.

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SEC to Vote On Whether to Ban Pay-to-Play Contributions by Investment Advisers to Elected Officials

June 29, 2010

On June 30, 2010, the Commissioners of the Securities and Exchange Commission (“SEC”) will vote on whether to restrict investment advisers from participating in “pay to play” transactions with public officials.  The purpose of the proposed rule is to eliminate potential corruption from the process of awarding management contracts for public retirement funds.  If approved, the rule would prohibit investment advisers from making or soliciting political contributions to or for officials who are in a position to award the management of pension funds. 

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Upcoming Webinar: Supervising Gifts & Political Contributions of Investment Adviser Representatives

October 26, 2009

Although the U.S. Securities and Exchange Commission (“SEC”) does not currently have any specific rules associated with the giving or receiving gifts or political contributions by representatives affiliated with a federally registered investment adviser, the influencing of others through gifts and political contributions in the context of an investment advisory relationship creates a potential conflict of interest, which must be addressed and mitigated by an investment adviser.

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Is Your RIA Supervising the Gifts and Political Contributions of Its Investment Adviser Reps – Learn About the SEC’s Proposed Pay-to-Play Rule

October 07, 2009

The U.S. Securities and Exchange Commission (“SEC”) recently proposed new SEC Rule 206(4)-5 under the Investment Advisers Act of 1940. According to the SEC, the proposed rule is intended to curtail “pay to play” practices by registered investment advisers that seek to manage money for state and local governments.

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SEC Proposes Ban of Political Contributions by Registered Investment Advisers Seeking to Manage Public Pensions

July 24, 2009

Earlier this week, the U.S. Securities and Exchange Commission (“SEC”) proposed a new rule prohibiting “pay to play” practices by SEC registered investment advisers seeking to manage money for state and local governments. The SEC explained that “[t]he measures are designed to prevent an [investment] adviser from making political contributions or hidden payments to influence their selection by government officials.” The proposed SEC rule prohibit three primary activities by a federally registered investment adviser seeking to manage public funds: (1) political contributions (2) solicitation of political contributions and (3) use of a third-party to solicit the government.

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