The entire securities industry and its participants … whether it is issuers, intermediaries, fund companies, or other market participants would not be able to function, much less profit, without the trust of investors and the public as a whole. Pay to play activity—where intermediaries direct contributions in order to obtain advisory pension plan business—undercuts this basic trust by harming investors and damaging the reputations of regulated institutions and the securities industry as a whole.

As an SEC Commissioner, you quickly learn that there will always be someone somewhere engaging in securities fraud because the temptation is always there. Likewise, the temptation to engage in pay to play activity is all too clear. As you have already heard today, public pension plans control trillions of assets and represent one-third of all U.S. pension assets. The advisory business generated from these plans is tantalizing in terms of both the fees and the reputational benefit.

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