Law360, New York (September 8, 2014, 10:31 AM EDT) -- The U.S. Securities and Exchange Commission recently brought the first action against an investment adviser under Rule 206(4)-5 under the Investment Advisers Act of 1940 (Advisers Act), the so-called "pay-to-play rule." This rule prohibits an investment adviser from receiving compensation for advisory services provided to a government entity, such as a public pension plan, for two years (two-year timeout) following a campaign contribution by the advisory firm or any of its covered associates[1] to a politician, political candidate, or state or local official who is in a position to influence (either directly or indirectly) the selection of the investment adviser to provide advisory services to the public pension fund or other government entity....