Overview

In response to recent criminal and regulatory enforcement actions
concerning alleged “pay-to-play” practices in the public pension fund
arena, the U.S. Securities and Exchange Commission (the “SEC”) has
approved a new rule (Rule 206(4)-5) promulgated under the Investment
Advisers Act of 1940 (the “Advisers Act”). This new rule is intended to
eliminate “pay-to-play” practices with respect to the management of
governmental pension fund assets by leveling the playing field for
awarding contracts to advisers of public pension funds and investment
funds in which public pension funds invest. The SEC believes this rule will
significantly curtail the corrupting influence of pay-to-play practices of
investment advisers.