A Compilation Of Enforcement And Non-Enforcement Actions - August 2009

Non-Enforcement Matters

Proposed SEC Rule Intended to Curb Advisers' Pay to Play Practices

The SEC recently proposed a new rule (Rule) to curb so-called "pay to play" practices by investment advisers seeking business from public pension and other governmental plans. The Rule's intent is to prevent investment advisers from donating to politicians in an effort to influence politicians in selecting an adviser to manage government-held investments. In her statement before the SEC, Chair Mary Schapiro described the SEC's concern in this area as follows: More than $2.3 trillion is invested in government pension plans and government-sponsored 529 plans. Government officials often seek outside investment advisers to help make investment decisions for those plans. In turn, the investment advisers are paid based on the assets under management. There have been several recent cases of investment advisers making substantial campaign "donations" to government officials who