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Investment adviser charged with pay-to-play violation Involving campaign contribution

On Behalf of | Apr 30, 2024 | Securities and Compliance

The Securities and Exchange Commission has charged a Minnesota investment adviser with violating the SEC’s pay-to-play rule, InvestmentNews reports.

The SEC found that Wayzata Investment Partners LLC continued to receive compensation from a government entity within two years after a campaign contribution to an elected official who had influence over the selection of investment advisers for advisory services for that entity.  Under the settlement, Wayzata will pay a $60,000 civil penalty.

According to the SEC’s order, the Minnesota State Board of Investment made two $150 million investments, in 2007 and 2013, in private equity funds managed by Wayzata Investment Partners. Then in 2022, an unnamed employee or partner made a $4,000 contribution to a government official sitting on the state board of investment, the SEC said.

The pay-to-play rule prohibits investment advisers from providing compensatory advisory services – either directly to a government client or through a pooled investment vehicle – for two years following a campaign contribution by the firm or certain associates to candidates or officials in a position to influence the selection or retention of investment advisers to manage the assets of public pension funds or other public entities.

Wayzata Investment Partners was determined to have willfully violated Section 206(4) and Rule 206(4)-5 thereunder of the Investment Advisers Act of 1940. The firm did not admit or deny the findings but consented to a cease-and-desist order and to a censure and agreed to pay the civil money penalty.

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