On November 6, the Financial Industry Regulatory Authority (FINRA) released Notice to Members 17-37, which provides information about the Pay-to-Play rule applicable to capital acquisition brokers (CABs). The SEC’s pay-to-play rules prohibit an investment adviser and its covered associates from providing or agreeing to provide payment to any person to solicit a government entity for investment advisory services on behalf of the investment adviser, unless the person is a “regulated person.”

FINRA’s new rule clarifies that CABs are subject to the same pay-to-play restrictions already applicable to non-CAB member firms and that CABs, therefore, constitute “regulated persons” for purposes of the SEC’s pay-to-play rules. Please see the October 6 edition of the Corporate & Financial Weekly Digest for more information.