As noted in previous mailings, the Financial Industry Regulatory Authority’s (FINRA) pay-to-play and related recordkeeping rules — FINRA Rules 2030 and 4580 — will take effect on August 20, 2017.
The SEC previously had stated that it would not recommend action against an investment adviser under SEC Rule 206(4)-5’s placement agent restrictions. The restrictions limit an adviser’s ability to use affiliates or third parties as placement agents until the latter of the effective date of FINRA’s pay-to-play rule or the MSRB’s amendments to Rule G-37 subjecting municipal advisors to its pay-to-play restrictions. As the MSRB’s amendments to Rule G-37 are already in effect, the SEC is expected to begin enforcing Rule 206(4)-5’s placement agent restrictions on August 20, 2017 as well.
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