SEC Adopts “Pay to Play” Rules
July 19, 2010
Types : Alerts
A new rule, adopted by the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940 (“Act”) imposes strict limitations on the extent to which investment advisers may seek to influence the award of advisory contracts relating to “government entities” by paying referral fees to any third party or by way of political or other “contributions.” Referral fees and contributions that do not satisfy these limits will subject the adviser to a two year “time out” during which the adviser will be prohibited from receiving compensation for providing advisory services to the “government entities” involved.