pay-to-play

Last year, an asset manager with offices in New York, Texas, and Vermont was publicly censured by the Securities and Exchange Commission and ordered to pay a substantial fine. Its offense?  The asset manager hired an individual who had previously made a personal political donation to the campaign of a…

Continue Reading Three Political Law Landmines for Hedge Funds, Private Equity Funds, and Investment Firms

Important changes to California’s pay-to-play law took effect January 1, 2025, and now the state’s regulations have caught up to the law.

The state’s Fair Political Practices Commission adopted the new regulations late last month, following statutory revisions to California’s complex pay-to-play law found at California Government Code § 84308…

Continue Reading California Updates Pay-to-Play Law Regulations to Reflect Recent Law Changes

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

With Election Day fast approaching, corporations face increasing pressure from both internal and external forces to make legal decisions about political activities. This can be a fraught area of law, with little understood, highly technical regulatory issues that vary significantly across jurisdictions. Corporate counsel should be mindful of common—and sometimes…

Continue Reading Avoiding Pitfalls on the Path to Election Day: Common Political Law Risks for Corporations in Election Season

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…

Continue Reading California Passes New Pay-to-Play Regulations for Contributions by Government Contractors and Others

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…

Continue Reading New Pay-to-Play Contribution Law for D.C. Contractors Takes Effect Next Month

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

During the diligence process that precedes a merger or acquisition, investment firms and corporations should pay careful attention to political law risks.  Political laws are notoriously complex, are often not intuitive, and even seemingly minor or technical violations of these rules can result in significant penalties and reputational harm.  These…
Continue Reading The Top 10 Political Law Red Flags for M&A Deals