RICHARD MARSHALL
(212) 536-3941
marshard@kl.com

November 1, 1999

Mr. Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609

Re: File No. S7-19-99

Dear Mr. Katz:

This letter is to comment on proposed Rule 206(4)-5 under the Investment Advisers Act of 1940 ("Pay to Play Rule"). The Pay to Play Rule would prohibit an adviser from providing advisory services for compensation to a government client for two years after the adviser, or any of its partners, executive officers or solicitors, make a contribution to state treasurers or comptrollers or other elected officials who can influence the selection of the adviser. Section 208(d) under the Investment Advisers Act of 1940, as amended ("Advisers Act"), prohibits any person indirectly, or through or by any other person, to do any act or thing which it would be unlawful for such person to do directly under the provisions of the Advisers Act.

Our comment is an inquiry regarding the applicability of the Pay to Play Rule to an adviser's parent company or the partners, executive officers or solicitors of an adviser's parent company. Specifically, under Section 208(d), would a violation of the Pay to Play Rule be deemed to occur where, in the absence of an attempt to intentionally evade the Pay to Play Rule,: (i) an adviser's parent company or the partners, executive officers or solicitors of an investment adviser's parent company, make contributions to state treasurers or comptrollers or other elected officials who can influence the selection of the adviser and (ii) the adviser provides advisory services for compensation to a government client? If the answer to this question is yes, the Pay to Play Rule would have an excessively broad application which we believe was unintended and would have undesirable policy consequences. Given the scarcity of authorities interpreting Section 208(d), we urge the Commission to clarify this issue in any release that may be issued adopting the Pay to Play Rule.

Thank you in advance for your consideration of this comment. Please contact me at (212) 536-3941 if you wish to discuss it.

Sincerely,


Richard D. Marshall