New FINRA Pay-to-Play Rules Effective August 20 - State and Federal Communications

August 18, 2017  •  

New FINRA Pay-to-Play Rules Effective August 20

On August 20, new pay-to-play regulations of the Financial Industry Regulatory Authority (FINRA) take effect. FINRA Rule 2030 restricts contributions made to an official of a government entity being provided investment advisory services or being engaged to provide investment advisory services by certain parties.

The rule applies to broker-dealers, placement agents, and covered associates acting on behalf of certain regulated investment advisors or soliciting a government entity to invest in certain pooled investment vehicles.

The restrictions also prohibit soliciting a political action committee to make contributions or doing anything indirectly that, if done directly, would result in a violation of the rules. Another rule effective on the same date is FINRA Rule 4580, which mandates certain record-keeping requirements concerning related contributions.

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