Many state and local jurisdictions allow voters to decide whether the jurisdiction should issue bonds to fund municipal projects.  The Municipal Securities Rulemaking Board (MSRB) is concerned that municipal securities dealers are using political contributions to these bond ballot campaigns to secure business by the issuer of the bonds on the ballot.  Yesterday, the MSRB proposed changes to its pay-to-play rule (Rule G-37) that would increase the disclosure of bond ballot contributions by dealers in an attempt to reduce these pay-to-play concerns.

MSRB Rule G-37 already requires municipal securities dealers to disclose information about contributions to bond ballot campaigns.  The MSRB states that it is now seeking additional details on these contributions to “assist the MSRB in [its] ongoing study of the perceived correlation between giving bond ballot campaign support and getting underwriting business.” It is important to note that this is all about disclosure; contributions to bond ballot campaigns do not trigger the two year prohibition on municipal business that can be triggered by contributions to certain government officials. 

The proposed rule amendments seek the following additional details on bond ballot contributions:

  • the complete name of the municipal entity issuing the bonds authorized by the bond ballot campaign;
  • the specific date (month, day, and year) on which the contributions were made;
  • the complete name of any primary offerings resulting from the bond ballot campaign, for which the dealer now engages in municipal securities business;
  • details on any payments or reimbursements the dealer received related to bond issuances resulting from bond ballot campaigns to which the dealer contributed.

The proposal also amends the definition of a “contribution” to include in-kind contributions to bond ballot campaigns. 

This proposal indicates that the MSRB is continuing to monitor closely the political activity of municipal securities dealers for possible pay-to-play activity.

Tags: bond ballot campaigns, G-37, MSRB, pay-to-play
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Photo of Derek Lawlor Derek Lawlor

Derek Lawlor is of counsel in the firm’s Election and Political Law Practice Group. Derek advises corporations, nonprofit organizations, and trade associations on compliance with federal and state lobbying, campaign finance, and government ethics laws.

Clients regularly rely on Derek to assist with…

Derek Lawlor is of counsel in the firm’s Election and Political Law Practice Group. Derek advises corporations, nonprofit organizations, and trade associations on compliance with federal and state lobbying, campaign finance, and government ethics laws.

Clients regularly rely on Derek to assist with their complex questions related to activities and projects that implicate all of these laws. Derek advises federal and state candidates and super PACs on campaign finance and disclosure issues. Derek also represents clients in government investigations and inquiries conducted by the Federal Election Commission, Office of Congressional Ethics, and Congressional Committees and Commissions.

Derek’s representation of clients covers the full range of important political law issues that they face, including:

  • Advising clients on their registration and reporting obligations under the federal Lobbying Disclosure Act, as well as state and local lobbying laws, including helping client organizations evaluate the core questions that arise in this space:
    • Has the organization or any of its employees triggered lobbying registration requirements?
    • What lobbying income, expenditures, issues, or contacts need to be disclosed on lobbying reports?
    • Does procurement or sales activity directed at governmental entities trigger lobbying registration in a particular jurisdiction?
    • What are the best practices for designing a lobbying compliance program?
  • Assisting corporations and trade associations with the establishment and operation of connected PACs, which frequently entails evaluating the following questions:
    • What steps does the organization need to take to start up and register a connected PAC?
    • What are the ongoing reporting requirements under the Federal Election Campaign Act (“FECA”) or state campaign finance laws?
    • Which employees can the organization solicit and what are the rules on conducting a solicitation campaign?
    • What are the limits on making contributions to federal, state, or local candidates, party committees, or other political committees?
    • What are the best practices for designing a PAC compliance program?
  • Evaluating whether a client’s proposed activities might trigger registration under the Foreign Agents Registration Act (“FARA”), and if so, advising on registration and ongoing reporting obligations;
  • Advising federal and state candidates, super PACs, and other political committees on compliance with FECA, FEC regulations and reporting requirements, state campaign finance laws, rules on disclaimers placed on communications, and other political law compliance topics;
  • Counseling individuals who are entering government service, including Senate-confirmed positions, on the various financial disclosure requirements, conflicts of interest considerations, and other ethics law issues they may face;
  • Helping clients establish politically active or policy-focused nonprofit organizations, and proving ongoing support related to tax and political law issues that might arise from their activities; and
  • Advising corporations, nonprofits, and individuals on their proposed donations to candidates, political committees, and other politically active outside groups.

Derek is a Professorial Lecturer in Law at the George Washington University Law School.

Prior to receiving his law degree, Derek worked in the Office of General Counsel at the U.S. House of Representatives.

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