In an article published in Law360, Partner Benjamin Neaderland and Counsel Thomas Bredar examine the SEC's Investment Advisers Act, or the "pay-to-play" rule. Nearly 15 years after being implemented, the authors discuss the rule's drawbacks, limitations and pitfalls, and propose modifications that would help to mitigate unintended consequences.
Excerpt: "The rule is not working as intended. Its scope is often difficult to ascertain, it leads to significant compliance costs, and as SEC Commissioner Hester Peirce stated in remarks at an Investment Adviser Association conference on March 6, it has 'real First Amendment implications.' Looming in the background are the rule's harsh penalties that can apply even when an innocent mistake is made."
