Tag Archives | Rule 206(4)-5

Compliance and the Presidential Candidates

With the New Hampshire primary complete, the field of presidential candidates will continue to become smaller. Some of those dropping out may lower their expectations to Vice President or go back to their day jobs. Registered investment advisers have to worry about those day jobs when it comes to campaign donations. Under SEC Rule 206(4)-5, […]

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Another Pay-to-Play Case

There are few among us who think the high cost of getting elected and fundraising that it requires is good for American politics. The SEC took a moral high ground and passed Rule 206(4)-5. That rule effectively prohibits investment managers from making political contributions to politicians who control pension money, other than small token amounts. […]

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Politician: Holding Out a Stack of Money

Pay to Play Rule In Effect on July 31

The Securities and Exchange Commission announced the compliance date for the ban on third-party solicitation pursuant to the Pay-to-Play rule: July 31, 2015. Rule 206(4)-5 prohibits an investment adviser from providing compensated services to a government entity, following a political contribution to certain officials of that entity. Rule 206(4)-5 became effective on September 13, 2010 […]

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$250 Could Cost a Firm $6.1 Million

A T. Rowe Price vice president made a $250 contribution to the campaign of Scott Walker for governor of Wisconsin in a recall election. That small donation could have cost T. Rowe Price $6.1 million in fees. The SEC’s Rule 206(4)-5 once again shows it scary side to advisers. Fortunately, the Securities and Exchange Commission […]

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SEC Issues Second Exemptive Relief from Pay-to-Play

It’s been about a year since the Securities and Exchange Commission granted its first exemptive order Rule 206(4)-5 when an adviser accidentally violated the pay-to-play rule. The SEC has now issued its second relief order. Ares Real Estate Management Holdings filed for exemptive relief after a senior partner wrote a $1,100 check to Colorado Governor […]

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Lawsuit Against SEC’s Political Contribution Rule

The New York Republican State Committee and the Tennessee Republican Party brought suit against the Securities and Exchange Commission challenging its political contributions rule for investment advisers, Rule 206(4)-5. The complaint seeks an injunction against the enforcement of the rule’s political contribution restrictions on contributions to federal candidates. The first attack on the rule is […]

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SEC Charges Private Equity Firm With Pay-to-Play Violations

The SEC has brought its first case under the pay-to-play rule for registered investment advisers. It’s just as horrible as I thought it would be. The Securities and Exchange Commission enacted Rule 206(4)-5 to address pay-to-play abuses involving campaign contributions made by registered investment advisers and their key employees. The concern was contributions to government […]

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Supreme Court

Pay to Play and the Supreme Court

The US Supreme Court struck down some campaign finance limitations in McCutcheon v. Federal Election Commission. My first question was whether this court ruling would impact the Securities and Exchange Commission’s Rule 206(4)-5. The answer is “no.” Mr. McCutcheon wanted to contribute $1776 dollars to a long list of political candidates. Each individual contribution is […]

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compliance politics and money

Some Relief for a Fund Manager Under the Political Contributions Rule

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 […]

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SEC Brings a Pay-to-Play Action

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 […]

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