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Alternative Market Briefing

Third party marketing firms may see a boost from new SEC ruling regarding public pension and government investment accounts

Friday, July 02, 2010

From Kirsten Bischoff, Opalesque New York:

Wednesday marked the end of a long wait for the finalization of the SEC rule changes that will apply to "public pension funds and similar government investment accounts". The rule is meant to address the potential for pay to play scandals, such as the one that was uncovered involving the $130bn The New York Common Retirement Fund and investment advisors including the Quadrangle Group and that brought such kickback practices between some firms and their institutional investors to light.

When the regulatory agency first began looking at the interactions between investment managers and government run investment funds, it considered an outright ban on third party marketers. Outcry from all quarters (including the enormous US public pensions - which hold $2.6tln in assets but often don't have in-house specialists and that sometimes rely on third party marketing relationships for consultant-like services) was the driving force between the final toned down rule. In its final form the rule requires third party marketing firms to be registered investment advisors or broker dealers.

"I think it's very positive because it will cause everybody to register and follow the rules and play on a level playing field," says Don Seinbrugge, Manag......................

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