The 60-day public comment period on the Securities and Exchange Commission’s proposed “measures to curtail pay-to-play practices” ends today. The SEC’s plan, which would prevent private equity firms from hiring placement agents to solicit public pensions for commitments, has drawn some 170 responses, many from the private equity community, and most of which say the rule would hurt GPs and LPs alike.
The SEC’s staff will now review the responses, then draft an official recommendation for the Commission. Given the volume of the responses and the number of issues raised by the commenters, this could take some time, a spokesman for the SEC said.
If the comments raise enough questions for the commissioners, the SEC may have to issue another version of the proposed rule and open it up to public comment again. If this were to happen, it would be a good sign for placement agents, who hope to see a revised proposed rule that does not include a ban on contacting public pensions.
Otherwise, the staff will draft a final recommendation to the Commission which will be voted on in an open meeting. The SEC will most likely announce the meeting seven days before it occurs. There is no limit on how much time can elapse between the end of the comment period and the public meeting, however.
The SEC, along with New York Attorney General Andrew Cuomo, have engaged in a multi-year investigation of pay-to-play practices at the $109 billion New York State Common Retirement Fund in which political operatives allegedly strong-armed investment firms into paying sham finder’s fees in exchange for commitments from the pension. Cuomo has indicted six people, including alleged ringleader Henry Morris, a former political operative of former New York Comptroller Alan Hevesi; David Loglisci, the former New York Common chief investment officer; and Barrett Wissman, the former head of a Texas-based hedge fund.
Today Saul Meyer, founder of Dallas-based private equity advisory firm Aldus Equity, pleaded guilty to fraud charges in the investigation.