Tag Archives: SEC

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) … Continue Reading

Covington Updates Investigations Manual for House and Senate Chiefs of Staff

Covington today released an updated version of its manual for Chiefs of Staff to Members of Congress concerning best practices for responding to government investigations of Members and their staff.  Titled “A How-To Guide for Chiefs of Staff,” the manual describes how government investigations unfold and the steps that Chiefs of Staff need to take … Continue Reading

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 FINRA … Continue Reading

MSRB Pay-to-Play Rule Expanded, Opening Door to Enforcement

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 an expansion to its pay-to-play … Continue Reading

SEC Issues Fines for Pay-to-Play Violations That Predate Its Pay-to-Play Rule

A $12 million settlement announced last week by the Securities & Exchange Commission suggests that the SEC will aggressively pursue alleged schemes connecting political contributions to government contracts even if the political contributions do not violate its 2010 pay-to-play rule.  According to the settlement order, in 2010, the head of Public Funds at State Street … Continue Reading

Congressional Spending Bill Shuts Down Key Goals of Campaign Finance Reform Community

A major spending bill posted late last night by Congressional leaders contains provisions shooting down two key initiatives of the campaign finance reform community.  Stymied by a Federal Election Commission that has increasingly struggled to find consensus, campaign finance activists in recent years have turned their attention to other federal regulators, pressing those regulators to … Continue Reading

SEC Fines Should Prompt Firms Engaged in Political Intelligence To Revisit Insider Trading Policies

In a rare move, the Securities & Exchange Commission has assessed penalties against a political intelligence firm for failing to adopt adequate policies to prevent the flow of inside governmental information to the firm’s clients.  The enforcement action is particularly noteworthy because all the factual allegations took place in 2010, before Congress passed the STOCK … Continue Reading

What’s Next for the SEC Pay-to-Play Rule Challenge?

Yesterday’s D.C. Circuit opinion upholding the SEC’s burdensome “pay-to-play” rule on procedural grounds is bad news for those questioning the rule’s constitutionality.  Nevertheless, the rule is still far from invincible. The SEC pay-to-play rule, among other things, effectively prohibits investment firm executives from making certain political contributions to state and local officeholders and candidates.  Last … Continue Reading

Highlights from Wagner; D.C. Circuit Upholds Contributions Restrictions But Limits Ruling

The Wagner case, decided today by the D.C. Circuit, is important because of its analysis of the constitutionality of federal campaign contribution restrictions and, by extension, of pay-to-play laws generally. Covington has been monitoring this case since the district court decision in 2012, to the argument before the D.C. Circuit in 2013, and the decision … Continue Reading

The SEC & Big Data

In our discussion of the Securities & Exchange Commission’s (SEC) actions over the past year, we described how the SEC is ramping up enforcement of its pay-to-play restrictions.  We also pointed out an acknowledgment by an agency enforcement official that the agency is “actively looking” for violations and that the agency does its own “surveillance.” What kind … Continue Reading

The SEC Pay-to-Play Rule Year in Review

When the history of the Securities & Exchange Commission’s pay-to-play rule is written, 2014 could be the inflection point.  Developments this year suggest two dramatically different paths for the rule in the years to come: either the rule will unravel from court challenges or it will become an increasingly prominent enforcement weapon in the SEC’s … Continue Reading

FINRA Likely to Adopt Pay-to-Play Rule

On November 14, the Financial Industry Regulatory Authority (FINRA) issued a notice asking for comment (by December 15) on its proposal to establish three rules designed to restrict pay-to-play practices.  The three rules include a pay-to-play prohibition (Rule 2390), a disclosure requirement (Rule 2271), and a recordkeeping requirement (Rule 4580).  The rules largely track the … Continue Reading

SEC Announces Major Fines In First Pay-to-Play Enforcement Case

The Securities & Exchange Commission hit a Philadelphia-area private equity firm today with a major penalty, in the SEC’s first case involving alleged violations of its 2010 “pay-to-play” rules.  More enforcement actions may be coming. The SEC pay-to-play rules were adopted to prevent, among other things, executives of investment firms from making political contributions in … Continue Reading

Shareholders Try New Tactic in Corporate Political Disclosure Fight

This year has not been a great one for activists seeking to force corporations to increase disclosure of their political activities.  According to the Manhattan Institute’s Center for Legal Policy, average shareholder support for proposals related to political spending or lobbying declined again this year, from 22 percent to 20 percent for lobbying proposals and … Continue Reading

SEC Takes a Pass on Corporate Political Disclosure, But Other Fronts Remain

If there was an award for “political law issue of the year,” corporate political disclosure would be a front-runner.  About a year ago, the Securities & Exchange Commission (“SEC”) asked the Office of Information and Regulatory Affairs (“OIRA”)—housed within the Office of Management and Budget as part of the Executive Office of the President—to add … Continue Reading

Update on Corporate Political Activity Disclosure

A hot topic we’ve been tracking closely this year concerns the regulatory and legal battles over corporate political activity disclosure.  This past week has been notable in two respects. As we’ve previously reported here, in December 2012 the Securities and Exchange Commission (“SEC”) identified potential rulemakings that it might undertake in 2013.  Among the items … Continue Reading

Shareholder Demands for Corporate Political Disclosure

The Conference Board has issued an interesting report on “Corporate Political Spending.”  The report addresses an increasingly high-profile issue for politically active public companies: demands from shareholders and interest groups that corporations publicly disclose all of their political and lobbying activities.  Much disclosure is already required, of course, by federal, state and local campaign finance … Continue Reading

SEC Staff Takes the Position that Political Spending Proposals Are Substantially Identical to Lobbying Proposals

One issue that confronted many public companies this year was how to respond when they received multiple shareholder proposals relating to political contributions and lobbying matters. One approach that some companies have turned to relies on Rule 14a-8(i)(11) under the Securities Exchange Act of 1934, which allows a company to exclude from its proxy materials … Continue Reading

SEC Rulemaking on Corporate Political Spending Disclosure

As has been widely reported, the Securities and Exchange Commission (“SEC”) recently made some rumblings about undertaking a rulemaking requiring corporations to disclose their funding and participation in political activities to shareholders.  The move has been heralded by corporate governance reform groups and decried by some from the business sector.  But what exactly does this … Continue Reading

SEC “Risk Alert” Issued Regarding Pay-to-Play Compliance

In an unusual development, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations has issued a “National Examination Risk Alert” summarizing its findings after pay-to-play compliance examinations conducted by the SEC staff.  The examinations focused on municipal securities dealers that are subject to the Municipal Securities Rulemaking Board’s pay-to-play rule, which is referred … Continue Reading

“Pay to Play” Laws Continue To Bite

While Super PACs and million dollar contributions have dominated the campaign finance headlines this election year, as with every election, there are trends developing just below the surface that the media have yet to focus on clearly.  This year, one of those emerging trends is the increasing bite of so-called “pay to play” laws.  These … Continue Reading
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