SEC Releases Staff Responses on Pay-To-Play Rule
March 24, 2011
The PAC is a covered associate only if the adviser or any of its covered associates has the ability to direct or cause the direction of the governance or the operations of that PAC (see section II.B.2(a)(4) of the Adopting Release). However, a chain of contributions through PACs made for the purpose of avoiding the pay to play rule, would violate the rule’s, and section 208(d) of the Advisers Act’s, general prohibitions against doing anything indirectly which would be prohibited if done directly (see rule 206(4)-5(d)).Additionally, the response to question V. I states that the SEC rule does not preempt state and local pay-to-play rules. While the staff responses are not official regulations of the SEC, they nevertheless provide useful guidance.