SEC Pay-to-Play

The Securities and Exchange Commission (SEC) this week issued a cease-and-desist order that demonstrates the SEC pay-to-play rule’s expansiveness and the SEC’s readiness to enforce it to the letter, even when it is virtually impossible that a political contribution could have influenced a government entity’s investment decision.

In this alert…

Continue Reading SEC Enforcement Order Highlights Far Reach of Pay-to-Play Restrictions

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…

Continue Reading SEC Commissioner Says It’s “Past Time” To Reform Overly “Blunt” Pay-to-Play Rule

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…
Continue Reading Covington Releases 400-Page, 50-State Survey of Pay-to-Play Rules (2022 Edition)

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…
Continue Reading In Major Blow To Its Opponents, SEC Pay-to-Play Rule Survives D.C. Circuit Challenge

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…
Continue Reading Investment Adviser Hit With $100K SEC Fine, a Reminder that Public Universities are Covered by Pay-to-Play Rule

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 …
Continue Reading Survey of the Pay-to-Play Laws of the United States

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…
Continue Reading SEC Pay-to-Play Rule Set to Expand to Capital Acquisition Brokers

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…
Continue Reading MSRB Pay-to-Play Challenge Stymied by Sixth Circuit over Standing

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…
Continue Reading Enforcement, Clarity Delayed for FINRA Pay-to-Play and Third Party Solicitation Rules

On Wednesday, the Municipal Securities Rulemaking Board (MSRB) announced that its expanded pay-to-play rules will cover municipal advisors, including third-party solicitors, as of August 17, 2016.

As we noted previously and discussed during Covington’s Corporate Political Activity & Government Affairs Compliance Conference earlier this month, the MSRB has been drafting…
Continue Reading MSRB Pay-to-Play Rule Expanded, Opening Door to Enforcement