7.22.2009 The SEC proposed measures intended to curtail “pay to play” practices by investment advisers who seek to manage money for state and local governments. The rule being proposed for public comment by the SEC includes prohibitions intended to capture not only direct political contributions by advisers but also other ways advisers might engage in pay-to-play arrangements. The rule, if adopted, will

  • Restrict political contributions;
  • Ban the solicitation of contributions;
  • Ban third-party solicitors; and
  • Restrict indirect contributions and solicitations.

The proposal is designed, among other things, to prohibit advisers from seeking to influence the award of advisory contracts by public entities through political contributions to, or for, those officials who are in a position to influence the awards. The SEC previously proposed a pay-to-play rule in August 1999, and that proposal remains outstanding.  

Click http://www.sec.gov/rules/proposed/2009/34-60332.pdf to access the proposing release.  

Click http://www.sec.gov/news/speech/2009/spch072209mls.htm to access SEC Chairman Schapiro’s remarks at the open meeting on the SEC’s proposed amendment to pay-to-play legislation.  

Click http://www.sec.gov/news/speech/2009/spch072209laa.htm to access SEC Commissioner Aguilar’s remarks at the open meeting on reducing the temptation of advisers to misuse political contributions.  

Click http://www.sec.gov/news/speech/2009/spch072209tap.htm to access SEC Commissioner Paredes’ remarks at the open meeting wherein he states his support for the pay-to-play proposal.