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Pay to play violations: an SEC focus

Pay to play violations: an SEC focus To explain and analyze the SEC’s January 17, 2017 announcement of settlements with ten investment advisory firms related to charges that those firms violated Rule 206(4)-5, known as the “Pay-to-Play Rule,” of the Investment Advisers Act of 1940.Design/methodology/approachExplains the Pay-to-Play Rule, its applicability to investment advisers, the de minimis and returned contribution exceptions, and the Rule violations cited by the SEC, and draws conclusions for the benefit of registered investment advisers and exempt reporting advisers.FindingsThe settlement included censures, civil money penalties, and recovery of compensation earned for firms’ failure to abide by the Rule, most often involving relatively small contributions by single covered individuals.Practical implicationsIn light of these settlements, registered investment advisers and exempt reporting advisers may wish to review the adequacy of their policies and procedures with respect to the Pay-to-Play Rule and the effectiveness of their implementation.Originality/valuePractical analysis and guidance from an experienced lawyer with a specialty in investment management. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Investment Compliance Emerald Publishing

Pay to play violations: an SEC focus

Journal of Investment Compliance , Volume 18 (2): 3 – Jul 3, 2017

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Publisher
Emerald Publishing
Copyright
© 2017 Seward & Kissel LLP.
ISSN
1528-5812
DOI
10.1108/joic-04-2017-0026
Publisher site
See Article on Publisher Site

Abstract

To explain and analyze the SEC’s January 17, 2017 announcement of settlements with ten investment advisory firms related to charges that those firms violated Rule 206(4)-5, known as the “Pay-to-Play Rule,” of the Investment Advisers Act of 1940.Design/methodology/approachExplains the Pay-to-Play Rule, its applicability to investment advisers, the de minimis and returned contribution exceptions, and the Rule violations cited by the SEC, and draws conclusions for the benefit of registered investment advisers and exempt reporting advisers.FindingsThe settlement included censures, civil money penalties, and recovery of compensation earned for firms’ failure to abide by the Rule, most often involving relatively small contributions by single covered individuals.Practical implicationsIn light of these settlements, registered investment advisers and exempt reporting advisers may wish to review the adequacy of their policies and procedures with respect to the Pay-to-Play Rule and the effectiveness of their implementation.Originality/valuePractical analysis and guidance from an experienced lawyer with a specialty in investment management.

Journal

Journal of Investment ComplianceEmerald Publishing

Published: Jul 3, 2017

Keywords: Investment advisers; Investment Company Act of 1940; US Securities and Exchange Commission (SEC); Pay-to-Play Rule

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