Pay-to-Play: FINRA Requests SEC Approval of Proposal to Regulate Political Contributions

January 20, 2016

The U.S. Securities and Exchange Commission (“SEC”) recently published for comments rules proposed by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Municipal Securities Rulemaking Board (“MSRB”) to regulate political contributions. FINRA proposed Rule 2030 closely follows Rule 206(4)-5 under the Investment Advisers Act of 1940 and would apply to political contributions by member firms that, for compensation, engage in distribution or solicitation activities with government entities on behalf of certain investment advisers, while FINRA proposed Rule 4580 would impose certain related books and records requirements. See Release No. 34-76767. Revised MSRB Rule G-37 would extend the current Rule G-37 to municipal advisors that are engaged as third-party solicitors or engage in municipal advisory business, while revised Rules G-8 and G-9 would apply current MSRB books and records rules to municipal advisors. See Release No. 34-76763 (December 23, 2015). Comments on proposed Rules 2030 and 4580 and revised Rules G-37, G-8 and G-9 are due on January 20, 2016.

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