SEC Proposes Rules to Curtail "Pay to Play" by Public Plan Advisers

On August 3, the Securities and Exchange Commission (SEC) published its proposed new rules addressing so-called "pay to play" practices by investment managers and advisers seeking to manage money for state and local governments, including public pension funds and college savings plans (529 plans).  "Pay to play" refers to arrangements whereby investment advisers who make political contributions or other payments are rewarded with (or afforded the opportunity to compete for) contracts to manage public pension funds and other state and local government accounts.  In recent years, federal and state regulators have brought both civil and criminal enforcement cases in connection with pay to play schemes involving public funds in New York, New Mexico, Connecticut, Illinois and Florida.  Please see the attached memo for a summary and further discussion of the proposed rules.