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.
Posts Tagged ‘Pay to Play’
New Pay to Play Laws Take Effect Today
Tuesday, March 15th, 2011 by VbhotlaIn California, Public Pension Planners Must Register as Lobbyists
Tuesday, October 12th, 2010 by VbhotlaIn California this week, a law was passed requiring state pension placement agents to register as lobbyists in the state. This is according to Pay to Play Law Blog, which said that the law is “aimed at terminating “bounty-based compensation” and unrestricted gift-giving.”
The legislation was pushed by California Public Employees’ Retirement System (CalPERS), state Controller John Chiang and Treasurer Bill Lockyer. As lobbyists, the California state pension placement agents must comply with California’s Political Reform Act of 1974. A similar law in New York, according to the blog’s authors, is much more restrictive, with an outright ban on placement agents in place.
Agents are banned from contributions to elected board officials, and must file quarterly compensation reports if doing business with CalPERS or the California State Teachers’ Retirement System (CalSTRS).
A goal of the bill was increased transparency. The blog reports that Lockyer said the legislation “embodies a principle that has been forgotten and flouted in California and across the nation: Workers, retirees and taxpayers come before politically-connected middlemen and wealthy Wall Street interests.”
Read the background on the legislation here, and the post from Pay to Play Law Blog here.
SEC’s Final Rule on Pay to Play Restrictions
Monday, July 12th, 2010 by VbhotlaThe Securities and Exchange Commission has issued final rules on pay-to-play practices by investment advisors. The
SEC’s commissioners voted unanimously to curtail such actions. SEC Chair Mary Schapiro, in a statement before the Commission, called the practice of pay-to-play actions “corrupt and corrupting.”
Essentially, public pension plan advisors are prohibited from steering campaign funds in a way that would affect municipal plans.
The decision is in three main parts, according to a press release from the SEC:
- It prohibits an investment adviser from providing advisory services for compensation — either directly or through a pooled investment vehicle — for two years, if the adviser or certain of its executives or employees make a political contribution to an elected official who is in a position to influence the selection of the adviser.
- It prohibits an advisory firm and certain executives and employees from soliciting or coordinating campaign contributions from others — a practice referred to as “bundling” — for an elected official who is in a position to influence the selection of the adviser. It also prohibits solicitation and coordination of payments to political parties in the state or locality where the adviser is seeking business.
- It prohibits an adviser from paying a third party, such as a solicitor or placement agent, to solicit a government client on behalf of the investment adviser, unless that third party is an SEC-registered investment adviser or broker-dealer subject to similar pay to play restrictions.
The SEC first proposed the rule last year; it is the first federal-level pay to play law in the nation. The rule come into effect 60 days after their publication in the Federal Register. State and locality pay-to-play laws are common.
Read the rule here at the SEC; watch Schapiro’s statement to the commission here.
