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GAO-10-936R 1 (2010-07-28)

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T I   M Accountability * Integrity * Reliability
United States Government Accountability Office
Washington, DC 20548


          B-320196


          July 28, 2010

          The Honorable Christopher J. Dodd
          Chairman
          The Honorable Richard C. Shelby
          Ranking Member
          Committee on Banking, Housing, and Urban Affairs
          United States Senate

          The Honorable Barney Frank
          Chairman
          The Honorable Spencer Bachus
          Ranking Member
          Committee on Financial Services
          House of Representatives

          Subject: Securities and Exchange Commission: Political Contributions by Certain
                  Investment Advisers

          Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a
          major rule promulgated by the Securities and Exchange Commission (Commission),
          entitled Political Contributions by Certain Investment Advisers (RIN: 3235-AK39).
          We received the rule on July 1, 2010. It was published in the Federal Register as a
          final rule on July 14, 2010. 75 Fed. Reg. 41,018. The rule is effective on
          September 13, 2010.

          The final rule and rule amendments address pay to play practices in investment
          advising. Specifically, the final rule prohibits an investment adviser from providing
          advisory services for compensation to a government client for 2 years after the
          adviser or certain of its executives or employees make a contribution to certain
          elected officials or candidates. The rule also prohibits an adviser from providing or
          agreeing to provide, directly or indirectly, payment to any third party for a
          solicitation of advisory business from any government entity on behalf of such
          adviser, unless such third parties are registered broker-dealers or registered
          investment advisers. In addition, the rule prevents an adviser from soliciting from
          others, or coordinating, contributions to certain elected officials or candidates or
          payments to political parties where the adviser is providing or seeking government
          business. The Commission is also adopting rule amendments that require a


GAO-10-936R

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