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
Pay-to-Play
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…
SEC Pay-to-Play Rule Set to Expand to Capital Acquisition Brokers
The universe of those covered by the SEC’s pay-to-play restrictions is expanding. If a newly proposed SEC rule is adopted as expected, pay-to-play restrictions will now extend to cover the recently created class of broker-dealers called Capital Acquisition Brokers (“CABs”). In this advisory, we discuss the background on the proposed rule and its implications…
MSRB Pay-to-Play Challenge Stymied by Sixth Circuit over Standing
Over the past few years, a few state political party committees have relentlessly sought to block or overturn pay-to-play laws overseen by the Securities and Exchange Commission (SEC). Yesterday, the Sixth Circuit delivered another defeat to an ongoing effort to challenge federal pay-to-play laws.
Last year, we noted that the Municipal Securities Rulemaking Board (MSRB)…
Enforcement, Clarity Delayed for FINRA Pay-to-Play and Third Party Solicitation Rules
The Securities and Exchange Commission announced Tuesday that it will allow further comment on a pay-to-play rule proposed by the Financial Industry Regulatory Authority (FINRA).
As we discussed previously, if the SEC approves FINRA’s pay-to-play rule, it would clarify that investment advisers are allowed to hire third party solicitors if they are subject to…
Expanded March 30 Filing Enhances Pay-to-Play Disclosure, Highlights Penalties for New Jersey Government Contractors
New Jersey is well-known for having strict, comprehensive, and complex pay-to-play laws. Two new changes to an annual pay-to-play filing required of some government contractors will only enhance that reputation.
State law requires a company that receives $50,000 annually through government contracts in New Jersey to file a report by March 30 of the following…