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.

This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.

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