Month: August 2009

New SEC Rule on Political Contributions by Certain Investment Advisers

sec-seal

The SEC has just published the text of the proposed rule on political contributions by investment advisers. SEC voted unanimously to propose this rule at its July 22nd Open Meeting.

http://www.sec.gov/rules/proposed/2009/ia-2910.pdf

The proposed rule is intended to curtail “pay to play” practices by investment advisers that seek to manage money for state and local governments.

The new proposed rule has four primary aspects:

1. Restricting Political Contributions

An investment adviser who makes a political contribution to an elected official in a position to influence the selection of the adviser would be barred for two years from providing advisory services for compensation, either directly or through a fund.

The contribution prohibition would also apply to certain executives and employees of the  investment adviser.

Additionally, the range of restricted officials would include political incumbents and candidates for a position that can influence the selection of an adviser.

There is a de minimis exception that permits contributions of up to $250 per election per candidate if the contributor is entitled to vote for the candidate.

2. Banning Solicitation of Contributions

The proposed rule also would prohibit an adviser from coordinating, or asking another person or political action committee to:

  1. Make a contribution to an elected official (or candidate) who can influence the selection of the adviser.
  2. Make a payment to a political party of the state or locality where the adviser is seeking to provide advisory services to the government.

3. Restricting Indirect Contributions and Solicitations

There would be prohibition on engaging in pay to play conduct indirectly, if that conduct would violate the rule if the adviser did it directly. That would include directing or funding contributions through third parties such as spouses, lawyers or companies affiliated with the adviser.

4. Banning Third-Party Solicitors

There is prohibition on paying a third party, such as a placement agent, to solicit a government client on behalf of the investment adviser.

Compliance, Van Halen and Brown M&M’s

You may have heard the story about Van Halen’s banning of brown M&M’s from its dressing room. I chalked it up to the pampered life of rock stars. (Especially, when compared to the more mundane life of a chief compliance officer.)

I just listened to the latest episode of  This American Life which revealed that the provision was not about pampering. It was about compliance.  Host Ira Glass talked with John Flansburgh (from the band They Might Be Giants) and he explained why the M&M clause was actually an ingenious business strategy. They recounted an except from David Lee Roth’s autobiography, Crazy from the Heat:

Van Halen was the first band to take huge productions into tertiary, third-level markets. We’d pull up with nine eighteen-wheeler trucks, full of gear, where the standard was three trucks, max. And there were many, many technical errors — whether it was the girders couldn’t support the weight, or the flooring would sink in, or the doors weren’t big enough to move the gear through.The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say “Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes . . .” This kind of thing. And article number 126, in the middle of nowhere, was: “There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.”

So, when I would walk backstage, if I saw a brown M&M in that bowl . . . well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.

Van Halen used the candy as a warning flag for an indication that something may be wrong. I see some lessons to be learned.

Update:

Diamond Dave talking about Brown M&Ms.

Brown M&Ms from Van Halen on Vimeo.

(via NPR Music’s The Record: The Truth About Van Halen And Those Brown M&Ms by Jacob Ganz

References:

Top Ten Mistakes Lawyers Make with Social Media

social-media-expert

Lawyers and law firms are rapidly adopting social media to market themselves and connect with peers. These are new tools. We are all trying to figure out how to use them. Just to make it more difficult, the tools themselves are rapidly evolving as we are learning how to use them.

Some lawyers are doing a great job using them. Some are doing a terrible job.

I thought I would share my thoughts on the mistakes I see.

10. Blocking access. Social media provides a rich source of information about clients, potential clients, opposing counsel, witnesses and other parties. It easy to get around the block with a mobile device or home access. Blocking is just an annoyance. It’s not an effective policy.

9. Failing to have a social media policy. People in your law firm are using social media. They may only using if for personal purposes. But if they identify your firm as their employer, what they do has an effect on the image of your firm.

8. Ignoring Facebook as a recruiting tool. “You do better fishin’ where the fish are.” Many summer associates are creating groups on their own. Your firm would be better off if they administered the group.

7. Not giving authorship to blog posts. The attorneys writing the story should get credit for the story. This gives an attorney an extra incentive to contribute and showcases their skills.

6. Not linking. A blog is much more useful to its readers and its authors if it links to other relevant information. There is no reason not to link to primary source material like statutes and regulations online. Link to other news sources, websites and blogs. Yes people will leave leave your site through those links. But they are more likely to come back if your site is the better source of information.

5. Failing to understand ethical limitations. The bar regulators have barely dealt with web 1.0, never mind the additional issues around web 2.0. Keep in mind that most social media activities can be considered advertising.

4. Abandoning without notice. Nothing lasts forever. If you started a blog and are not posting any more. Put a post saying you’ve stopped or are on hiatus. (This is what I did for my old KM Space blog.)

3. Failing to leverage LinkedIn. You should have a profile in LinkedIn that has at least as much information as the bio on your firm’s site. You should also be leveraging LinkedIn to stay up to date with the movement of your clients and former client contacts. LinkedIn is a great source of information for CRM systems.

2. Posting information about clients. As with any advertising, make sure you get written consent from clients before posting any information about your work with them.

1. Not using social media. The biggest mistake most lawyers are making with social media is not using these tools.  They are here to stay. Get used to it.

What mistakes to you see being made?

Image is from Hugh MacLeod of Gapingvoid – “cartoons drawn on the back of business cards”: you’re a social media specialist?