SEC Adopts Final Amendments To Pay To Play Rule


The U.S. Securities and Exchange Commission ("SEC") recently adopted amendments to Rule 206(4)-5 (the "Pay to Play Rule") under the Investment Advisers Act of 1940 ("Advisers Act"). These amendments are designed to:

• Scope: Synchronize the scope of the Pay to Play Rule after the elimination of the private adviser exemption as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), by extending it to apply to exempt reporting advisers and exempt foreign private advisers, in addition to registered investment advisers.

• Municipal Advisors and the Ban on Third-Party Solicitation: Add registered municipal advisors, in addition to registered investment advisers and registered broker dealers, as a type of "regulated person" that may be compensated by covered investment advisers under the Pay to Play Rule for soliciting state or local government entities, provided that they are subject to restrictions at least as stringent as the Pay to Play Rule.

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