Under new pay to play laws that go into effect today, the SEC will restrict investment advisers from directly or indirectly providing any advisory services to a state or local government entity for two years following a campaign contribution. The ban extends to “covered associates” who consist of any general partner, managing partner, or “executive officer,” or other individuals with a similar status or function; any employee who solicits government business or supervises someone who does; any PAC “controlled by” the investment adviser or one of its covered associates; all employees who solicit a government entity for the investment; and, in some cases, employees of a parent company, which could, in some cases, include employees of a parent company.
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New Pay to Play Laws Take Effect TodayTuesday, March 15th, 2011 by Vbhotla
The title “executive officer” was clarified to exclude those with titles that may indicate significance, but who, in reality, do not impact policy. For the purposes of this exclusion, “executive officer” has been defined as the president and vice presidents fast bad credit payday loans in charge of principal business units.
De minimis contributions (those of $350 or less per election per candidate if the contributor is eligible to vote for the candidate, $150 or less if outside of the contributor’s district) are exempt from the restriction.
Also included in the new law is a bundling prohibition. Investment advisers may not solicit or coordinate contributions for candidates or political parties in the states or localities in which they practice and may be looking to provide advisory services to the government. There is no outright ban on third party solicitors, but an investment adviser may not pay non-regulated persons to provide the services. Any third party solicitor must be subject to similarly stringent pay to play regulations.
The rules apply not only to registered investment advisers, but anyone who employs the private adviser exemption, and covers even indirect acts which, if done directly, would be in violation of the rule.