The conflict between the SEC and third-party marketers has been snowballing over the past year, specifically on their role and ability to link investors with managers without needing to adhere to more stringent regulations that would protect from corruption.
The proposed rule, released this past summer from the SEC, would, “…prohibit an investment adviser from providing advisory services for compensation to a government client for two years after the adviser or certain of its executives or employees make a contribution to certain elected officials or candidates.”
An organization that obviously had problem with the SECs crackdown is 3PM, the third party marketers association. In a letter sent to the SEC, they outlined their role in the investment process, stating that the proposed rule is, "an unreasonable and unjustified response that
affects an entire industry segment as a result of the improper and illegal misconduct of a few"
At present, it appears that the SEC will compromise on their position by allowing third party marketers to resume their role with public pension funds, with some enhanced and expanded registering regulations with Financial Industry Regulatory Authority, something that third party marketers working with hedgefunds already have to do.
Additional transparency is seemingly the best solution, and in fact, some like Agecroft Partners executive Donald Steinbrugge suggest taking it a step further. However, with the financial services industry still on fragile ground in regards to trust and risk issues, it will take an organization with a long-standing, consistent level of success to properly communicate how this process can work.
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