SEC Rule 206(4)-5 for investment advisers and fund managers limits the ability of a firm’s employees to make political contributions. It’s a nasty rule. Violation of the rule does not require any bad intent. The breadth of affected political candidates is long, diverse, and hard to discover. Anthony Yoseloff worked at Davidson Kempner Capital Management […]
The Securities and Exchange Commission filed a “pay-to-play” case against Goldman Sachs and one of its former investment bankers, Neil M.M. Morrison. The SEC alleges that Goldman and Morrison made undisclosed campaign contributions to then-Massachusetts state treasurer Timothy P. Cahill while he was a candidate for governor. The case was brought under the Municipal Securities […]
Last year a new rule from the Securities and Exchange Commission went into effect that limited the ability of investment advisers and private fund managers to make political campaign contributions. The purpose was to prevent some illicit pay-to-play activity by government officials who control government sponsored investment funds. With the close of the national political […]
Now that the Democratic and Republican conventions have ended and the presidential tickets are final, we can look at how the SEC’s new rule on political contributions will affect the November election. It won’t. Early in the Republican contest for the nomination, Rick Perry was on the watch list under Rule 206(4)-5. Since he could […]
The Securities and Exchange Commission extended the date by which registered investment advisers must comply with the ban on third-party solicitation in Rule 206(4)-5 under the Investment Advisers Act. The SEC is extending the compliance date in order to ensure an orderly transition. Since solicitors will need to registered as an investment adviser or a […]
The U.S. Court of Appeals for the Second Circuit upheld a New York City “pay-to-play” law against various constitutional challenges: Ognibene v. Parkes. The Pay to play law is in Local Law 34 and it: Lowers the caps applicable to campaign contributions from parties that have “business dealings” with New York City to $400 (otherwise […]
With the recent Iowa Straw Poll, the presidential campaign season is getting into full gear. That also means that campaign fundraising is in full gear. I thought it would be useful to apply the SEC’s new Pay-to-play for Investment Advisors to the crop of presidential contenders. Under SEC Rule 206(4)-5, investment advisors are limited in […]
In the face of some pay-to-play scandals involving investment advisers and government sponsored investment fund officials, the Securities and Exchange Commission slapped restrictions on the ability of investment advisers and fund managers to make political contributions. Rule 206(4)-5 prohibits an investment manager or fund manager from collecting fees for two years if the firm or […]
The staff of the Division of Investment Management at the Securities and Exchange Commission has prepared responses to some questions about Rule 206(4)-5 under the Investment Advisers Act of 1940. Here are a few that caught my eye: Question II.6. Covered Associates’ Family Members. Q: Are contributions by an advisory employee’s family members covered under […]
If you have (or want to have) government investors in your private fund then you need to be in compliance with Rule 206(4)-5 starting today. Summary (from the SEC): The Securities and Exchange Commission is adopting a new rule under the Investment Advisers Act of 1940 that prohibits an investment adviser from providing advisory services […]
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