19 September 2019 - Podcast
On August 17, 2017, the Financial Industry Regulatory Authority (FINRA) proposed to apply “pay-to-play” rules to capital acquisition brokers (CABs) that solicit government entities on behalf of investment advisers. In general, registered investment advisers are prohibited under SEC rules from paying any unregulated person to solicit government entities, on the advisers' behalf, for investment advisory services. The SEC considers FINRA-registered brokers to be “regulated persons” if they are subject to FINRA pay-to-play rules. FINRA's proposed rule change would explicitly apply such rules to CABs, who are FINRA members engaged in limited broker activities, such as advising with respect to corporate restructurings, and are otherwise subject to less onerous FINRA rules. For more information, see http://www.finra.org/sites/default/files/rule_filing_file/SR-FINRA-2017-027.pdf.