MAY AN INVESTMENT ADVISER REP MAKE POLITICAL CONTRIBUTIONS TO GOVERNMENT OFFICIALS? YES BUT BEWARE . . .

SEC Rule 206(4)-5 bars investment adviser reps from taking compensation for advisory services for a period of two years following the making of a contribution to any political candidate who has the power to award or influence the awarding of government advisory business to the rep or investment adviser. 

Rule 206(4)-5 does not prohibit the giving of investment advice but only the receiving of compensation for that advice and for a two-year  period.

NASAA's Content Outline for the Series 66 covers Political Contributions in Section IV (H) (4). This means that the Series 66 candidate can expect to see questions on political contributions on the test.

Bob Eder discusses political contributions in his Study for the Series 66 Exam on pages 269-271. Here is a sample of his treatment:

"Political Contributions                                                                       IV(H)(4)

To address the problem of investment advisers making political contributions or donations or gifts to public or elected officials for the purpose of winning government advisory business, Rule 206(4)-5 of the Investment Advisers Act bars such advisers from accepting compensation for government advisory services for a period of two years. This rule applies to advisers registered, or required to be registered, with the SEC. It also applies to advisers who are exempt from SEC registration because they deal with a small number of clients or venture capital funds. The SEC makes clear that what the rule bars is receiving and/or taking compensation for the period of two years."

Here is the link to NASAA's Content Outline and Test Specifications for the Series 66 exam. See Section IV (H) (4) on Political Contributions.

Study for the Series 66 Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's book on Amazon.

For questions about Bob Eder's Series 66 study manual, Study for the Series 66 Exam, or questions in general about the Series 66 exam, such as Political Contributions, feel free to email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001. See Bob Eder's Author Page on Amazon.com.


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