Shark Infested Waters: Solicitation of Government Clients and Other Pay to Play Hazards
1:15 PM – 2:30 PM
Friday, May 18
It is becoming increasingly more difficult for investment advisers to approach public pensions for potential business given the heightened regulatory scrutiny resulting from recent pay to play scandals. With the SEC-Play-to-Play rule in full force later this year and with states such as California and New York adding to the regulatory crazy quilt, how can you raise money from pension funds and remain in compliance with pay to play rules? Under the new SEC rule, an adviser is prohibited from being paid for services for a government client for two years after making a political contribution above a small amount. The regulation bans soliciting donations for a candidate, a process called “bundling.” Another aspect of the rule that goes into effect in September requires that third-party organizations that drum up government business for an adviser also register as advisers so that they fall under the new rule. Advisers also must maintain records of political contributions. A violation could lead to a two-year “death penalty” on government advisory services. Experts agree that there are many nuances of the rule that make it difficult and complex. Our panel will put the new regulations in historical context, discuss the challenges that have been brought about by the changes and provide actionable guidance on how to avoid the rule’s “death penalty”.
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