SEC Settlement Holds Important Pay-To-Play Lessons

On Aug. 19, the U.S. Securities and Exchange Commission settled with a registered investment adviser Obra Capital Management LLC, whereby the adviser paid a $95,000 civil money penalty in addition to being censured for violations of Rule 206(4)-5, the SEC's pay-to-play rule for investment advisers.

The SEC continues to take a vigorous approach with respect to pay-to-play rule-related enforcement actions. With U.S. state and federal elections approaching, the settlement is a reminder that investment advisers should remain focused on reviewing their policies, procedures and associated controls to ensure they do not violate the pay-to-play rule and similar laws, rules and regulations.