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
Last month, Compliance Week highlighted some of the compliance considerations for investment advisors (and other regulated firms) around the 2020 elections in a piece headlined “SEC ‘pay-to-play’ enforcement surge projected in 2021”. The article notes that tomorrow’s elections have spurred a massive wave of contributions - and are likely to also trigger a new wave of SEC enforcement.
compliance updates
Last month, Compliance Week highlighted some of the compliance considerations for investment advisors (and other regulated firms) around the 2020 elections in a piece headlined “SEC ‘pay-to-play’ enforcement surge projected in 2021”. The article notes that tomorrow’s elections have spurred a massive wave of contributions - and are likely to also trigger a new wave of SEC enforcement.
compliance updates
We’re continually updating our political contribution monitoring platform to better serve our customers. With the election around the corner, we’re excited to introduce our latest feature update: