Alternative Market Briefing

SEC willing to reconsider the proposed ban if FINRA could implement rules to check 'pay to play' activities

Monday, February 08, 2010

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From Sagar Chakraverty, Opalesque Asia:

According to a letter sent by Andrew Jr. Donohue, Director of US' Securities and Exchange Commission (SEC) to Richard G. Ketchum, Chairman & CEO of the Financial Industry Regulatory Authority (FINRA) on 18-Dec-09, the SEC indicated that an exception to the ban for registered broker-dealers acting as legitimate placement agents might be feasible if FINRA were to implement rules that would prohibit 'pay to play' activities by those persons (see letter here).

This issue has received a lot of publicity, Donald A. Steinbrugge, managing member of Agecroft Partners , a US-based third-party marketing firm focussing on alternative investments, told Opalesque.

The proposed rule follows a campaign by Andrew Cuomo, Attorney General of New York, to have third party marketers banned in NY State as well as other states. The campaign in other states received significant pushback, as many high profile public funds stood on the side of the third party marketing industry by articulating the value they add to their organizations.

The proposed rule The SEC on 22-July-09 voted unanimously to propose measures intended to curtail "pay to play" practices by investment advisers that seek to manage money for state and local governments. The measures are designed to prevent an......................

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