The Securities & Exchange Commission (“SEC”) has taken note of “pay to play” practices of
investment advisers, in which advisers make political contributions to elected officials
responsible for managing public pension plan assets in order to influence the official’s selection
of investment advisers to manage the funds they oversee. Such practices create a significant risk
of corruption and tend to compromise an adviser’s fiduciary obligations in violation of the antifraud
provisions of Section 206 of the Investment Advisers Act of 1940 (“Advisers Act”).
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