Client Alert
| July 14, 2010
New SEC Rule Prohibits Pay-to-Play Practices
In response to recent criminal and regulatory enforcement actions concerning alleged “pay-to-play” practices in the public pension fund arena, the U.S. Securities and Exchange Commission (the “SEC”) has approved a new rule (Rule 206(4)-5) promulgated under the Investment Advisers Act of 1940 (the “Advisers Act”). This new rule is intended to eliminate “pay-to-play” practices with respect to the management of governmental pension fund assets by leveling the playing field for awarding contracts to advisers of public pension funds and investment funds in which public pension funds invest. The SEC believes this rule will significantly curtail the corrupting influence of pay-to-play practices of investment advisers.
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This memorandum is intended only as a general discussion of these issues. It is not considered to be legal advice. We would be pleased to provide additional details or advice about specific situations. For additional information on this important topic, please feel free to call upon your Dewey & LeBoeuf relationship partner. No part of this publication may be reproduced, in whole or in part, in any form, without our prior written consent.
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