Edward Pittman, Brenden Carroll and Sean Murphy
The purpose of this paper is to explain two recent actions by the US Securities and Exchange Commission (SEC), a “Settlement Order” and a National Examination Risk Alert, that…
Abstract
Purpose
The purpose of this paper is to explain two recent actions by the US Securities and Exchange Commission (SEC), a “Settlement Order” and a National Examination Risk Alert, that highlight the importance of compliance controls with respect to political contributions and other political activities.
Design/methodology/approach
The paper explains Municipal Securities Rulemaking Board Rule G‐37, one of the earliest pay‐to‐play rules; the Settlement Order and how it addresses in‐kind campaign contributions, solicitation activities, and a municipal dealer's compliance failures; and the Risk Alert, including SEC staff observations and concerns based on examinations of the compliance programs of brokers and dealers engaged in the municipal securities business, practices the SEC staff has found problematic and in violation of Municipal Securities Rulemaking Board Rule G‐37, and certain practices firms have incorporated into their pay‐to‐play compliance programs.
Findings
The Settlement Order and Risk Alert provide an important reminder for investment advisers and municipal underwriters that are subject to pay‐to‐play restrictions, particularly highlighting issues relating to “in‐kind” contributions and solicitation activities, but also, beyond the municipal financing arena, may be of interest to investment advisers who have less guidance from the SEC on the application of Advisers Act Rule 206(4)‐5.
Practical implications
Because of the harsh consequences for not complying with the law, firms and their employees should be keenly aware of political activity that may cause violations of applicable pay‐to‐play restrictions.
Originality/value
The paper provides practical guidance from experienced financial services lawyers.
Details
Keywords
Edward L. Pittman, Christopher P. Harvey, Michael L. Sherman and Brenden P. Carroll
The purpose of this paper is to explain the SEC staff's web site responses to a series of frequently asked questions concerning SEC Advisers Act Rule 206(4)‐5.
Abstract
Purpose
The purpose of this paper is to explain the SEC staff's web site responses to a series of frequently asked questions concerning SEC Advisers Act Rule 206(4)‐5.
Design/methodology/approach
The paper explains the SEC staff responses to FAQs on the ability to rely on prior Municipal Securities Rulemaking Board interpretations regarding MSRB Rules G‐37 and G‐38, determining who is an “official of a government entity,” determining who is a “covered associate,” payments of commissions or other compensation to brokers or others, the Rules' application to political action committees (PACs), and “effective dates” and “compliance dates” under the related recordkeeping rule.
Findings
Pay‐to‐play is the practice of making campaign contributions and related payments to elected officials in order to influence the awarding of lucrative contracts for the management of public pension plan assets and similar government investment accounts. The staff's answers to the FAQs announce cautious positions, do not address some of the more difficult issues advisers may face on a day‐to‐day basis, and are subject to change.
Originality/value
The paper provides practical guidance from experienced financial services lawyers.
Details
Keywords
In recent years, school districts have faced numerous questions surrounding accommodations of transgender students. Strong objections to accommodations have been voiced in public…
Abstract
In recent years, school districts have faced numerous questions surrounding accommodations of transgender students. Strong objections to accommodations have been voiced in public argument and litigation, primarily in the areas of athletics, bathrooms, and dress codes. As younger transgender students express their gender identity at school, however, the existing objections are weakened by considering the context of elementary rather than high school students. Greater numbers of young transgender students will likely encourage accommodation of trans students of all ages, as well as challenge the gender binary unconsciously taught in school.