- Rule 206(4)-5 applies to investment advisers even if the government entity was already invested in the covered investment pool at the time of the contribution. As noted above, Rule 206(4)-5 was passed in 2010, ten years after the partnership began. There is no exemption for investments existing at the time of the passage of the rule.
- The firm obviously did not receive exemptive relief from the SEC (which the SEC granted in 2013 to a different investment adviser). Rule 206(4)-5(e) provides that the SEC can exempt an investment adviser from the time-out provision upon consideration of several factors including, whether the exemption is in the public interest and whether the IA:
- before the contribution was made, adopted and implemented policies and procedures reasonably designed to prevent violations of the rule;
- prior to or at the time of the contribution had actual knowledge of the contribution;
- has taken all available steps to cause a return of the contribution; and
- has taken such other remedial or preventive measures as would be appropriate under the circumstances