Pay‐to‐play: SEC staff provides new guidance on Advisers Act Rule 206(4)‐5

Purpose – The purpose of this paper is to explain the SEC staff's web site responses to a series of frequently asked questions concerning SEC Advisers Act Rule 206(4)‐5. Design/methodology/approach – The paper explains the SEC staff responses to FAQs on the ability to rely on prior Municipal Securities Rulemaking Board interpretations regarding MSRB Rules G‐37 and G‐38, determining who is an “official of a government entity,” determining who is a “covered associate,” payments of commissions or other compensation to brokers or others, the Rules' application to political action committees (PACs), and “effective dates” and “compliance dates” under the related recordkeeping rule. Findings – Pay‐to‐play is the practice of making campaign contributions and related payments to elected officials in order to influence the awarding of lucrative contracts for the management of public pension plan assets and similar government investment accounts. The staff's answers to the FAQs announce cautious positions, do not address some of the more difficult issues advisers may face on a day‐to‐day basis, and are subject to change. Originality/value – The paper provides practical guidance from experienced financial services lawyers.