The SEC today voted to propose a rule aimed at cracking down on pay-to-play arrangements used by some public pension plans to select money managers.
Under the proposed rule, a money manager that makes a political contribution — either directly or through a fund — to an official who could influence a decision to hire the manager would be barred for two years from being paid by the pension plan, according to an SEC fact sheet.
An exception would allow the manager to contribute up to $250 to a candidate, if the manager is entitled to vote for the candidate.
A manager also would be barred from making contributions to a political party of the state or locality where the manager is seeking business, the fact sheet said.
Also under the proposed rule, managers would be prohibited from paying placement agents to solicit a government client on the money manager's behalf.
“Finally, the proposed rule would prohibit an adviser and certain of its executives and employees from engaging in pay-to-play conduct indirectly, such as by directing or funding contributions through third parties such as spouses, lawyers or companies affiliated with the adviser, if that conduct would violate the rule if the adviser did it directly,” the SEC fact sheet said.
The public will have 60 days to comment after the proposal is published in the Federal Register, according to the fact sheet.