Joe Birkenstock Discusses SEC Pay To Play In The IA Watch Weekly Briefing

Earlier this month Joe Birkenstock was quoted in the IA Watch Weekly Briefing, discussing SEC pay to play.

“Advisers should take away great skepticism from the SEC [in this case] that segregating your operations like this means that you’re exempt from registration,” says Joseph Birkenstock, a partner with Sandler Reiff Lamb in Washington, D.C. The agency expects virtually all firms (except for venture capital and single-family offices) above a certain asset threshold to register, he adds. The relatively modest penalty assessed to TL Ventures suggests the Commission took into account the firms’ defense – that they were exempt-reporting advisers and thus not subject to the pay-to-play rule, continues Birkenstock.

Most of his clients have adapted to the pay-to-play rule with the motto “just don’t give contributions,” he states. Others hold to a policy that, if there’s any doubt, don’t allow the political contribution. The enforcement case presented “zero doubt” of a violation because the mayor of Philadelphia and the state’s governor clearly have influence over their respective employee public pensions, Birkenstock says. Some lower-level candidates can be tougher to figure out, arguing for caution to avoid the rule’s painful two-year time-out.

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