The SEC on June 30 cracked down on money managers using campaign contributions to influence their hiring by public pension plans.
Under a new rule, money managers would generally be barred from doing business for two years with a public fund if key employees of the manager contributed more than $350 to the election of an official who could influence a public plan's selection of managers.
Key employees for managers would also be barred from funneling contributions to public officials through spouses, lawyers or affiliated companies.
In addition, the new rule would limit managers' use of placement agents or other third parties to solicit government officials on managers' behalf to an “SEC-registered investment adviser or broker-dealer subject to similar pay-to-play restrictions,” said an SEC fact sheet on the new rule.
Last July, the SEC proposed banning money manager use of placement agents altogether (P&I Daily, July 22, 2009).
“This approach should effectively eliminate the opportunity for abuse that currently exists from third-party placement agents,” said SEC Chairwoman Mary Schapiro at an agency meeting.
“However, if the commission determines that third-party placement agents continue to inappropriately influence the selection of investment advisers for government clients — even under our enhanced rules — I expect that we would consider the imposition of a full ban on the use of these third parties,” Ms. Schapiro said. — Doug Halonen