UpFront » News

There should be heightened compliance around employee political contributions now that the SEC has brought cases during the last few months based on its “pay-to-play” rule. In an election year of increased frequency of contributions to public officials, the SEC has been keying in on compliance with the rule at firms that manage investment mandates for state pensions or endowments, or those firms seeking advisory business from them. FrontLine Compliance Founder and President Amy Lynch states that this stems from the run-up of various vice presidential candidates prior to each political party’s convention, and the subsequent selection of Minnesota Governor Tim Walz, who is also chair of the Minnesota State Board of Investment (MSBI). Ms. Lynch comments that many firms took the position that the weeks before each convention were the time to make political contributions since the VP would be officially named at each convention. However, she explains that the SEC may or may not agree with that perspective, so firms should look closely at any contributions made to VP candidates that held state positions. If a firm’s employees are covered by the rule’s requirements, those employees are generally prohibited from making contributions or donations in excess of $350 to certain elected officials or candidates. See FundFire (subscription required), “$5B Alts Manager Hit with ‘Pay-to-Play’ Violation”