2.5.5.5. Look-Back Provision
The pay to play rule contains a look-back provision that requires dealers and advisors to look back when determining whether an associated person has triggered the ban on securities or advisory business.
A contribution will trigger the ban if it was made within two years prior to the date the individual became an MFP or MAP.
A contribution will not trigger the ban if either of the following conditions hold:
• It was made by a natural person who was not an MFP or MAP at the time the contribution was made but who became an MFP or MAP for the sole purpose of being a solicitor and has not solicited the municipal entity since the contribution was made.
• It was made by a natural person who is an MFP or MAP solely because of his management or supervisory position, and it was made more than six months prior to the date that the individual became a MFP or MAP.
In addition to the look-back provision, the pay to play rule has a look-forward provision that comes into play when an MFP or MAP transfers to another position within her firm, in which she is no longer an MFP or MAP. For one year after the transfer, she continues to count as an MFP or MAP for purposes of whether she can trigger the ban. During this year, if she makes a contribution that triggers the ban, the ban lasts for two years, just as if she had made the contribution before taking the non-MFP, non-MAP job.
Sample Question