July 26, 2010
SEC Adopts New Measures Curtailing Pay-to-Play Practices by Investment Advisers
The Securities and Exchange Commission has unanimously approved new rules, effective September 13, 2010, that will curtail the influence of campaign contributions by investment advisers. The intent of the new rules is to lessen the influence of campaign contributions by investment advisers pursuing government contracts.
The new rules include prohibitions intended not only to stop direct political contributions by investment advisers, but also to block other ways in which advisers may engage in pay-to-play arrangements. For example, the new rules:
- Prohibit an investment adviser from providing services for compensation for two years if the adviser makes a political contribution to an elected official with the power to influence that adviser’s selection.
- Prohibit an advisory firm from soliciting or coordinating campaign contributions from others on behalf of an elected official from whom the adviser is providing or seeking government business.
- Prohibit an adviser from circumventing the rules by paying a non-SEC registered third party to solicit a government client on behalf of the investment adviser.
The SEC rule changes also require a registered adviser to maintain certain records of the political contributions made by the adviser and certain of its executives or employees.
Full text the final rule: Political Contributions by Certain
Investment Advisers
July 14, 2010 Federal Register