On June 22, 2011, the Securities and Exchange Commission (the “SEC”) amended the investment advisor “pay-to-play” rule in response to changes made by the Dodd- Frank Act. The rule is designed to prevent an advisor, either directly or indirectly, from seeking to influence the award of contracts by government officials through political contributions.

Under the revised rule, investment advisers are prohibited from engaging any third party to solicit government authorities on their behalf unless such third party is a “regulated person” and subject to pay-to-play rules that are at least as stringent as the investment adviser pay-to-play rules. The definition of “regulated persons” initially was limited to include registered investment advisers and broker-dealers and FINRAmember registered broker-dealers. Under the expanded definition, however, a “municipal advisor” (defined as a person registered as such pursuant to Section 15B of the Securities Exchange Act of 1934 and subject to the rules of the Municipal Securities Rulemaking Board), is also included in the definition. The intent of the expansion is to harmonize the rule with Section 975 of the Dodd-Frank Act, which requires persons providing certain advisory services to municipalities or soliciting municipalities for advisory services offered by an unaffiliated third party investment advisor to register as a municipal advisor. Investment advisors have until June 13, 2012 to comply with the revised prohibitions relating to the use of third party solicitors.

Sec. Exch. Press Rel. No. 2011-133 (June 22, 2011)