March 19, 2019

Potential Pay-to-Play Risks Posed By New Presidential Candidates

The growing field of candidates in the Democratic primary represents increased risk of contributions that violate “pay-to-play” regulations, and thus increased risk to financial institutions serving public sector clients. This is especially relevant this month as Gov. Jay Inslee of Washington becomes the first incumbent governor to launch a 2020 presidential campaign.

And importantly - as a sitting Governor who, for instance, appoints a number of officials to Washington’s state investment boards - contributions to Inslee are subject to pay-to-play statutes, such as Municipal Securities Rulemaking Board (MSRB) Rule G-37, Securities and Exchange Commission (SEC) Rule 206(4)-5 and 15Fh-6 Financial Industry Regulatory Authority (FINRA) Rules 2030 and 4580, and Commodity Futures Trading Commission (CFTC) Rule 23.451.

A contributor to Inslee’s presidential campaign may believe themselves to be in the clear in giving to a federal campaign, but they could instead be exposing themselves and their firm to significant risk of penalties or lost business.

With more state and local officials expected or rumored to be launching presidential campaigns soon - including Mayor Pete Buttigieg of South Bend, Mayor Bill De Blasio of New York City, and Governor Steve Bullock of Montana - this area of risk may grow substantially in the coming months. At illumis, we’re committed to providing the best possible data monitoring solutions to our customers to make sure that - regardless of an individual employee’s full understanding of the intricacies of pay-to-play regulations - compliance teams will have all the information they need to easily identify and address potential risks.

This is intended for informational purposes only and does not represent legal opinion or advice. For any questions or more information about the issues described, please reach out to illumis at [email protected].

Please Note: This post was updated in June 2020 to reflect our company’s new name: illumis


compliance updates
David Lombardy recently launched his own regulatory and compliance consulting firm, Pillar Compliance Group, to assist investment managers with the development, implementation, and ongoing monitoring of their compliance programs. In reviewing the regulatory environment around pay-to-play compliance, he saw the value in using illumis’ political contribution monitoring platform to provide the best risk coverage available for his clients.
compliance updates
For the last few months, Blucora – a FinTech company providing software solutions for wealth management and tax preparation – has waged a war against Ancora, an Ohio-based investment advisor who had acquired a minority stake in the company and sought to reconstitute Blucora’s board.
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We are excited to announce that illumis has been named “Best RegTech Startup” in the 2021 FinTech Breakthrough Awards! The award recognizes our creativity in mitigating operational risk related to political contributions and pay-to-play risk.