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U.S. court rejects Republican challenge to SEC© pay-to-play rule

Publisher: Reuters
Author: Sarah Lynch

A U.S. appeals court handed the Securities and Exchange Commission a victory on Tuesday by dismissing a challenge from two state Republican parties to the SEC© pay-to-play rule for investment advisers.

Republicans in New York and Tennessee said the rule, which places some restrictions on asset managers who donate to political campaigns, was a violation of free speech rights. The U.S. Court of Appeals for the District of Columbia Circuit, however, said the Republicans missed a key 60-day deadline to challenge the rule after it went into effect and had lost their chance to try and have it overturned. Reuters could not immediately reach attorneys for the plaintiffs. An SEC© spokesperson did not immediately respond to a request for comment on the ruling. The SEC’s pay-to-play rule aims to combat a potential quid pro quo between investment advisers and elected officials in a position to help them win business.

It prohibits advisers from receiving compensation for helping to manage public assets, such as pension plans, for two years after making a campaign contribution to public officials or candidates in a position to award contracts.

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