California recently passed a series of new regulations affecting its “pay-to-play” laws that limit political contributions by state and local government contractors and others involved in proceedings on contracts, licenses, permits, and other “entitlements for use” in the state. These regulations implement changes to the law that took effect this year, which include applying the
Pay-to-Play
Updated and Expanded: Covington Announces 2023 Edition of Pay-to-Play Rule Survey
For over a decade, Covington has published a detailed survey of the “pay-to-play” laws of all 50 states. Now, for the first time, Covington is updating the survey with a new section covering federal pay-to-play rules, in addition to those of the 50 states and many cities and counties. This new section details the federal…
New Pay-to-Play Contribution Law for D.C. Contractors Takes Effect Next Month
The District of Columbia’s new pay-to-play law will take effect on November 9, 2022. As we blogged about here, the Campaign Finance Reform Amendment Act of 2018 prohibits certain campaign contributions by contractors doing or seeking to do business with the D.C. government. This prohibition applies to entities holding or seeking contracts worth an…
SEC Commissioner Says It’s “Past Time” To Reform Overly “Blunt” Pay-to-Play Rule
The U.S. Securities and Exchange Commission (“SEC”) last week announced settlements with four investment advisory firms regarding alleged violations of the SEC’s pay-to-play rule, illustrating that federal regulators continue to aggressively pursue such cases. The rule at issue, Rule 206(4)-5 (“the Rule”), prohibits investment advisers from, among other things, receiving compensation from certain government entities…
Covington Releases 400-Page, 50-State Survey of Pay-to-Play Rules (2022 Edition)
Companies doing business with state and local governments or operating in regulated industries are subject to a dizzying array of “pay-to-play” rules. These rules effectively prohibit company executives and employees (and in some cases, their family members) from making certain personal political contributions. Even inadvertent violations can be dangerous: a single political contribution can, for…
In Major Blow To Its Opponents, SEC Pay-to-Play Rule Survives D.C. Circuit Challenge
The U.S. Court of Appeals for the D.C. Circuit yesterday issued a long-awaited opinion upholding, on the merits, a recent update to the SEC’s pay-to-play rule. While the case involved only a narrow piece of the rule, the decision’s logic is worded more broadly and could apply to the SEC rule as a whole, making…
Investment Adviser Hit With $100K SEC Fine, a Reminder that Public Universities are Covered by Pay-to-Play Rule
In December, the Securities and Exchange Commission (“SEC”) fined an investment adviser $100,000 for violating the SEC’s pay-to-play rule. The SEC’s rule effectively prohibits investment adviser executives and other “covered associates” of an investment adviser from making political contributions in excess of de minimis amounts ($350 per election if the contributor is eligible to vote…
First Significant Pay-to-Play Legislation for the District of Columbia Approved by D.C. Council
On December 4, the D.C. Council unanimously approved the first significant pay-to-play law for Washington, D.C. The restriction would apply to contractors with—or seeking—one or more contracts with an aggregate value of $250,000 or more. The legislation will be considered by the Mayor and would be subject to a 30-day period of congressional review.
The…
Survey of the Pay-to-Play Laws of the United States
Companies doing business with state and local governments or operating in regulated industries are subject to a dizzying array of “pay-to-play” rules. These rules effectively prohibit company executives and employees (and in some cases, their family members) from making certain personal political contributions. Even inadvertent violations can be dangerous: a single political contribution can, for …
The Top Three Political Law Risks for Hedge Funds, Private Equity Funds, and Investment Firms
Perhaps no industry faces more scrutiny and regulation of its political activities than the financial services industry. Even though these rules are often not intuitive, failure to comply with them can result in big penalties, loss of business, and debilitating reputational consequences. In this advisory, we describe three sometimes overlooked political law related risks…