To the tune of a $100,000 fine and five year debarment against an individual broker, the Securities and Exchange Commission let it be known – again – that it is very serious about putting teeth behind its new pay-to-play rules.
As readers of this blog know well, the avowed goal of the SEC’s pay-to-play framework is to protect the integrity of the public procurement process by preventing registered investment advisors from improperly influencing the award of state and local contracts for the management of public investment funds.
Goldman Sachs ordered to pay over $14 million in record-breaking pay-to-play penalties. The mandate for municipal underwriters everywhere to heed the SEC’s instructions on Rule G-37 could now not be any clearer.
The Securities and Exchange Commission issues a pay-to-play Risk Alert as a precursor to future enforcement.
For more than two years, this blog has been covering the Securities and Exchange Commission’s foray into the world of pay-to-play regulation and the Commission’s attempt to implement federal pay-to-play restrictions for registered investment advisers. The latest chapter in this long and winding saga occurred earlier this month, when the SEC formally extended the compliance date for the third-party solicitation ban imposed by the recently-crafted amendments to Rule 206(4)-5 under the Investment Advisers Act of 1940.
Last February, we posted an entry flagging potential concerns arising from the SEC’s new pay-to-play rules for investment advisors as applied to presidential candidates. Admittedly, at the time we were talking about Governors Haley Barbour and Mitch Daniels, but the same holds true now for Texas Governor Rick Perry.
This Wednesday, the Securities and Exchange Committee (SEC) voted to propose rules that would impose certain business conduct standards on banks and other firms that deal in complex financial instruments known as “swaps.”
Recent commentary on the SEC’s new pay-to-play rules has generally focused on the lack of certainty to the business community on how these rules will be applied, as well as the administrative difficulties that will likely arise as the rule first goes into effect. RealClearPolitics has an interesting new take on the regulations, which focuses on how this could impact the 2012 Republican Presidential Primary.
On March 14, the SEC’s pay-to-play rule will come into effect and there is growing concern that the rule’s exemption for accidental violations will result in an administrative hailstorm.
New York State Attorney General and Governor-Elect Andrew Cuomo has announced additional settlements in his investigation of “pay-to-play” practices and conflicts of interest at public pension funds. Veteran Albany lobbyist Patricia Lynch Associates, Inc. will pay a $500,000 fine and be banned for a period of five years from appearing before the State Comptroller’s Office. The State Comptroller is the sole trustee of New York State’s approximately $133 billion Common Retirement Fund (CRF).
The MSRB is at it again. It is wasting no time putting rules in place to address pay-to-play practices for the advisory community. MSRB called a special meeting to address this issue, among others, on the heels of the 2010 Dodd-Frank Act, which expanded MSRB’s jurisdiction to include the regulation of municipal advisors, in addition to dealers, which MSRB has regulated since 1975.
Public pensions are not for sale was the message surrounding Assembly Bill 1743, signed into law by Governor Arnold Schwarzenegger on September 30. The bill was sponsored by the California Public Employees’ Retirement System (CalPERS), state Controller John Chiang and Treasurer Bill Lockyer, both ex officio members of the pension fund’s Board. Chiang and Lockyer have touted AB 1743 as legislation that would ensure transparency and promote merit based investment decisions.
Since the SEC passed its pay-to-play rule in June, the feds have clearly been looking for a target to “make an example out of” as a way of showing they are serious about pay-to-play. A sacrificial lamb appears to have been found. Recently, the SEC opened an “informal inquiry” into the Kentucky Retirement Systems’ (“KRS’”) use of placement agents as a result of one of KRS’s own internal audits. KRS oversees a $12.5 billion fund for state and county retirees.
Yesterday, the MSRB filed a proposed rule change with the SEC consisting of interpretive guidance in connection with Rule G-37 and the use of political action committees (“PACs”). The MSRB said it is reviewing the pay-to-play rules because recent consolidation in the financial industry has placed bond dealers under the control of banks, bank holding companies and other companies that have PACs.
In a continued effort to thwart pay-to-play practices and increase transparency of corporate involvement in the political process, the House Financial Services Committee approved the Shareholder Protection Act of 2010, H.R. 4790 by a vote of 35-28 this past Monday.
On Wednesday, June 29, the Securities and Exchange Commission unanimously approved the final text of a new rule under the Investment Advisers Act of 1940 directed at preventing pay-to-play practices by investment advisers.
After almost a year (and countless scandals with related enforcement actions later), it appears the SEC will issue its much loved, hated and debated pay-to-play rule. The SEC has announced the subject matter to be discussed at its open meeting on June 30, 2010: “The Commission will consider whether to adopt a new rule and… Continue Reading
The SEC has given notice that it intends to take a very active role with respect to pay-to-play issues in the securities markets. It recently issued a report warning firms that municipal securities rules prohibiting pay-to-play apply to affiliated financial professionals, not just a firm’s employees.
The SEC report was issued in connection with an Enforcement Division inquiry into whether JP Morgan Securities Inc. (JPMSI) violated MSRB Rule G-37.
In response to numerous comment letters the SEC about their proposed ban on third party intermediaries in the government arena, the SEC is working with FINRA to create exemptions to its pay-to-play proposal.
On December 4, 2009, the MSRB filed with the SEC amendments to Rule G-37 and Rule G-8.
The Securities and Exchange Commission (SEC) has given notice that it intends to take a very active role with respect to pay-to-play issues in the securities markets and has put the regulated community on notice that it expects private corporate compliance training to be well under way as well. As we have recently reported, the… Continue Reading
The pay-to-play probe related to U.S. public pension systems led by New York Attorney General Andrew Cuomo, the U.S. Securities and Exchange Commission and the Justice Department has claimed another victim. Bloomberg reports today that New Mexico’s chief investment officer has resigned after being drawn into the nationwide investigation.
Amid the continued debate over the SEC’s proposed pay-to-play rules there are some proponents who argue that oversight of pay-to-play practices must reach beyond the agency’s current recommendations. So even while many commentators oppose the rules on grounds that they sweep too broadly and impair competition, (click here to read comment letters) the former head of the SEC,… Continue Reading
While most agree the SEC’s proposed new pay-to-play rules are a necessary development, there has been controversy around a proposal that would ban placement agents from representing clients before state and local persons. Unlike the MSRB pay-to-play rules, the SEC would prohibit investment advisers from using any third party intermediary, including placement agents registered as broker-dealers… Continue Reading