Pay-to-Play Rules: Latest Developments on MSRB, SEC, CFTC and FINRA Regulations

Pay-to-play rules restrict political contributions made by covered employees of companies that have, or attempt to obtain, a business relationship or contract with a government entity. Covered contributions may have draconian implications, resulting in a loss of business and compensation. At the federal level, these pay-to-play rules apply to broker-dealers and municipal advisors (MSRB Rules G-37/G-38), investment advisers (SEC Rule 206(4)-5), and swap dealers (CFTC Rule 23.451). On August 25, 2016, the SEC approved FINRA proposed rules 2030 and 4580 that impose pay-to-play restrictions and record keeping requirements on broker-dealers that act as placement agents for investment advisers or their managed funds. Many states and localities throughout the U.S. regulate political contributions in a similar manner. Additional regulatory developments are expected in the area of pay-to-play in the coming months.

Learning Objectives: 

1. Learn the key provisions of pay-to-play rules and their practical impact
2. Discuss strategies for compliance
3. Identify unique election year issues