The SEC Remains Focused On Pension Funds And Pay-To-Play

On May 9, 2012, the Securities and Exchange Commission ("SEC") charged former Detroit mayor Kwame M. Kilpatrick, former city treasurer Jeffrey W. Beasley, MayfieldGentry Realty Advisors, LLC ("MGRA")¹ a registered investment adviser, and Mayfield the CEO and majority owner of MGRA, in connection with allegations that they were involved in a secret exchange of lavish gifts to peddle influence over Detroit's public pension funds' investment process. This is the SEC's most recent pay-to-play action and it highlights the breadth of how "contribution" is defined under the federal securities laws.

The SEC alleges that Defendants Mayfield and MGRA violated Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, Sections 206(1) and 206(2) of the Investment Advisers Act, which prohibit an investment adviser from directly or indirectly defrauding, or otherwise deceiving, any client or prospective client. The SEC also alleges that Kilpatrick and Beasley aided