Ten investment advisory firms agreed to pay penalties ranging from $35,000 to $100,000 to settle SEC charges alleging that the firms violated SEC pay-to-play rules. The SEC Orders specified that each respective firm violated the "two-year timeout" requirement by accepting fees from city or state pension funds after associates at that firm made campaign contributions to elected officials or political candidates having the potential to wield influence over such pension funds.
SEC Enforcement Division Public Finance Abuse Unit Chief LeeAnn Ghazil Gaunt made the following statement:
"The two-year timeout is intended to discourage pay-to-play practices in the investment of public money, including public pension funds. Advisory firms must be mindful of the restrictions that can arise from campaign contributions made by their associates."
Commentary
Political contributions, like personal investment decisions, are subject to strict control processes and must be made in light of those processes.
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