The Securities and Exchange Commission is seeking comments on a revised proposal recently filed by the Financial Industry Regulatory Authority to establish “pay-to-play” and related rules regulating the activities of FINRA member firms that engage in distribution or solicitation activities for compensation with government entities on behalf of investment advisers. The revised proposal responds to comments made relative to a December, 2014 FINRA proposal. The primary differences between the revised proposal and the prior proposal are that the revised proposal does not require a member firm to (1) provide disclosure to government entities regarding its distribution and solicitation activities, or (2) disgorge fees or other compensation received in violation of the rules.
FINRA is proposing a pay-to-play rule, Rule 2030 (Engaging in Distribution and Solicitation Activities with Government Entities), that would impose substantially the same restrictions on member firms engaging in distribution or solicitation activities as the SEC pay-to-play rule imposes on investment advisers. FINRA also is proposing Rule 4580 (Books and Records Requirements for Government Distribution and Solicitation Activities), which would impose recordkeeping requirements on member firms in connection with political contributions.
Comments on the proposed Rules are due on or before January 20, 2016.
To see the proposal click here.