Subject: File No. S7-18-09
From: Girard Miller
Affiliation: Columnist, Governing Magazine and Author: Investing Public Funds and Pension Fund Investing

August 5, 2009

The proposed rule is both necessary and appropriate.

Please give serious consideration to expanding its scope to another segment of the public-sector retirement industry: the 457 and 403(b) deferred compensation marketplaces. In those arenas, the same kinds of influence-peddling have occured.

In particular, there have been reported instances of large "endorsement" and "royalty" payments by plan administrators/recordkeepers typically registered as B/Ds to non-profit organizations (both professional associations and local government policy organizations) as well as labor unions.

Your press release states: The proposed rule also would prohibit an adviser from paying a third party, such as a solicitor or placement agent, to solicit a government client on behalf of the investment adviser. My view is that unions and non-profit associations that promote or endorse a preferred provider in the 457 and 403b markets in exchange for compensation should fall expressly under that prohibition. A troublesome jurisdictional question is whether insurance companies making these contributions can evade the SEC because they are not technically investment advisors—although they are licensed distributors of SEC-registered mutual funds.

Media attention to some of these abuses has already been published. (See Forbes magazine reports, for one example) I am willing to provide more information to SEC staff upon your request.

You will find my timely column on this topic online this Friday (8/7) if you keyword-search: Girard Miller Governing Pension Pay to Play

Girard Miller