Pay-to-Play Rule Answers Provided By IM Staff
The staff of the Division of Investment Management has released responses to questions about the new “Pay-to-Play” rule, which limits political contributions to state and local officials in a position to hire an investment adviser. Most significantly, the staff indicates: (a) an adviser’s affiliated company and its personnel are not “covered associates” (i.e. persons prohibited from making political contributions); (b) family members of advisory employees are not covered associates, (c) independent contractors are included, (d) trail payments with respect to previous solicitations are not prohibited so long as there is no ongoing solicitation, (e) interpretations under MSRB Rule G-37 are not authoritative but can be considered “useful to consider”, and (f) the rule does not pre-empt state and local laws regarding campaign contributions and pay-to-play. The staff also provides specific guidance with respect to PAC contributions. The staff also reminds firms that, regardless of the technical responses, a firm may not do anything indirectly that is prohibited if done directly.
OUR TAKE: Most helpful is the direction to consider G-37 interpretations, as a body of precedent has already developed. We are not sure of the implications of the staff’s statement that the rule does not pre-empt state and local laws in the event of a conflict of laws.
Posted by Todd Cipperman at 3/25/2011 5:37 AM 
Categories: Compliance and Operations
Tags: paytoplay campaign contribution
Categories: Compliance and Operations
Tags: paytoplay campaign contribution
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