PurposeThe purpose of this paper is to explain the SEC staff's web site responses to a series of frequently asked questions concerning SEC Advisers Act Rule 206(4)‐5.Design/methodology/approachThe paper explains the SEC staff responses to FAQs on the ability to rely on prior Municipal Securities Rulemaking Board interpretations regarding MSRB Rules G‐37 and G‐38, determining who is an “official of a government entity,” determining who is a “covered associate,” payments of commissions or other compensation to brokers or others, the Rules' application to political action committees (PACs), and “effective dates” and “compliance dates” under the related recordkeeping rule.FindingsPay‐to‐play is the practice of making campaign contributions and related payments to elected officials in order to influence the awarding of lucrative contracts for the management of public pension plan assets and similar government investment accounts. The staff's answers to the FAQs announce cautious positions, do not address some of the more difficult issues advisers may face on a day‐to‐day basis, and are subject to change.Originality/valueThe paper provides practical guidance from experienced financial services lawyers.

PurposeThe aim of this paper is to explain the provisions of the US Foreign Corrupt Practices Act that may be applicable to investment advisers seeking investments from foreign governments.Design/methodology/approachThe paper explains the background of the FCPA and its applicability to investment advisers, recommends policies and procedures for advisers to employ to reduce the risk of FCPA actions, recommends due diligence practices for third‐party relationships, and reminds advisers seeking business opportunities outside the USA of the importance of compliance with foreign anti‐bribery laws.FindingsThe FCPA applies to investment advisers whenever they seek a benefit, directly or indirectly, from a foreign official, as in the course of seeking investments in a sovereign wealth fund.Practical implicationsGiven the SEC's increased interest in pay‐to‐play activities, investment advisers who are seeking investments outside the USA should carefully review their existing FCPA policies, or develop new policies if they have not done so already.Originality/valueThe paper provides practical guidance from experienced financial services lawyers.

PurposeThe purpose of this paper is to explain two recent actions by the US Securities and Exchange Commission (SEC), a “Settlement Order” and a National Examination Risk Alert, that highlight the importance of compliance controls with respect to political contributions and other political activities.Design/methodology/approachThe paper explains Municipal Securities Rulemaking Board Rule G‐37, one of the earliest pay‐to‐play rules; the Settlement Order and how it addresses in‐kind campaign contributions, solicitation activities, and a municipal dealer's compliance failures; and the Risk Alert, including SEC staff observations and concerns based on examinations of the compliance programs of brokers and dealers engaged in the municipal securities business, practices the SEC staff has found problematic and in violation of Municipal Securities Rulemaking Board Rule G‐37, and certain practices firms have incorporated into their pay‐to‐play compliance programs.FindingsThe Settlement Order and Risk Alert provide an important reminder for investment advisers and municipal underwriters that are subject to pay‐to‐play restrictions, particularly highlighting issues relating to “in‐kind” contributions and solicitation activities, but also, beyond the municipal financing arena, may be of interest to investment advisers who have less guidance from the SEC on the application of Advisers Act Rule 206(4)‐5.Practical implicationsBecause of the harsh consequences for not complying with the law, firms and their employees should be keenly aware of political activity that may cause violations of applicable pay‐to‐play restrictions.Originality/valueThe paper provides practical guidance from experienced financial services lawyers.