Adviser Contributions Capped
Investment advisers will soon have to abide by new SEC rules that curb campaign contributions to elected officials given with the hope of getting lucrative contracts for the management of public pension plan assets.
The "pay-to-play" rules prohibit investment advisers 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, the SEC said June 30.
The SEC has also barred advisory firms and certain executives and employees from soliciting or coordinating campaign contributions from others 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.
In addition, advisers are prohibited 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.