Important Reminders About Pay-to-Play

Even though spring has only just begun, politicians are already starting to gear up for the November elections.  Not only will the election for the US Senate be held this year, but also a myriad of state and local elections will take place.  With this backdrop, it’s the perfect time to revisit the Securities and Exchange Commission’s (“SEC’s”) Rule 206(4)-5 (the “Rule”) of the Investment Advisers Act of 1940 (the “Advisers Act”), more commonly referred to as the “pay-to-play” rule.  “Pay-to-play” generally refers to various arrangements whereby an investment adviser may seek to influence the award of advisory business by making or soliciting political contributions to government officials who have the ability to award such business. While this rule has been in effect since 2011, this article will serve as a reminder of the key components of the Rule and discuss updates promulgated by the SEC since the Rule’s adoption.

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JLG Legal Risk Management Tip – Important Reminders About Pay-to-Play – 03.2014

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