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Compliance Date for Third-Party Solicitor Restriction Extended

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  • Baker, John
    The Securities and Exchange Commission has again extended the compliance date for the third-party solicitor provisions of Rule 206(4)-5 under the Investment
    Message 1 of 1 , Jun 8, 2012
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      The Securities and Exchange Commission has again extended the compliance date for the third-party solicitor provisions of Rule 206(4)-5 under the Investment Advisers Act of 1940, generally known as the pay-to-play rule. Release No. IA-3418 (June 8, 2012). The compliance date, as previously extended, had been scheduled for June 13, 2012. The third-party solicitor provisions of the rule prohibit an adviser and its covered associates from providing or agreeing to provide, directly or indirectly, payment to any third party for a solicitation of advisory business from any government entity on behalf of such adviser, unless such third party is an SEC-registered investment adviser or is a registered broker-dealer or registered municipal advisor subject to pay to play restrictions. Until the compliance date, however, advisers are not prohibited by the rule from making payments to third-party solicitors. The other provisions of the pay-to-play rule were already and continue to be in full effect.

      As further extended, the compliance date for the third-party solicitor provisions will be nine months after the compliance date of a final rule by which municipal advisor firms must register under the Securities Exchange Act of 1934. The extension is intended to ensure an orderly transition for advisers and third-party solicitors as well as to provide additional time for them to adjust compliance policies and procedures after the transition. The new compliance date is also intended to allow solicitors to assess compliance obligations with pay-to-play rules that may be adopted by FINRA (with respect to broker-dealers) or the Municipal Securities Rulemaking Board (with respect to municipal advisors). It is not clear when the SEC will adopt final registration rules for municipal advisors, or what the compliance date will be for that rule once it is adopted, but the current interim registration rule for municipal advisors expires September 30, 2012.


      The SEC's extending release is available at

      http://www.sec.gov/rules/final/2012/ia-3418.pdf

      For my original post on the adoption of the pay-to-play rule, see

      http://groups.yahoo.com/group/FundLaw/message/1282

      SEC staff guidance on the pay-to-play rule is available at

      http://www.sec.gov/divisions/investment/pay-to-play-faq.htm



      John M. Baker <JMB@...>
      Stradley Ronon Stevens & Young, LLP http://www.stradley.com
      1250 Connecticut Avenue, NW, Suite 500
      Washington, DC 20036
      202.419.8413
      202.822.0140 fax
      FundLaw Listowner http://groups.yahoo.com/group/fundlaw
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