On January 17, 2017, the SEC announced a number of political contribution-related settlements with investment advisers, both registered and exempt. As background, Rule 206(4)-5 under the Investment Advisers Act of 1940 limits the size of political contributions that certain personnel of an investment adviser may make to state and local officials, among other things. Specifically, limits apply to contributions to officials or candidates (such as a Governor or State Treasurer) who can influence the investment decisions of public institutional investors (such as state employee pension plans) that are clients of the adviser or invest in the adviser's funds. If the relevant contribution threshold is breached, an adviser is prohibited from accepting compensation from the specific public investor for a two-year period. A quick summary of the settlements appears in the table below.
| SEC Reporting
Status (at time of conduct) |
Amount of Contribution(s) | Public Official Receiving Campaign Contribution | Adviser's Client or Investor over Which Public Official Had Investment Influence | SEC Penalty |
| Exempt Reporting Adviser | $500 $500 |
(1) Treasurer of Pennsylvania (who was also a candidate for Governor) and (2) Governor of Pennsylvania | Pennsylvania State Employees' Retirement System (for each) | $45,000 |
| Exempt Reporting Adviser | $1000 $500 |
Manhattan Borough President | New York City Employees' Retirement System | $70,456 |
| Exempt Reporting Adviser | $500 | Treasurer of Massachusetts | Massachusetts Pension Reserves Investment Management Board | $35,000 |
| Exempt Reporting Adviser | $500 $500 Solicited campaign contributions by co-hosting a fundraising event for the Governor of Massachusetts |
Governor of Massachusetts | Massachusetts Pension Reserves Investment Management Board | $75,000 |
| Registered Investment Adviser | $400 | Mayor of New York City | (1) Teachers Retirement System of the City of New York, (2) New York City Police Pension Fund, (3) New York City Fire Pension Fund, and (4) New York City Employees' Retirement System | $35,000 |
| Registered Investment Adviser | $10,000 | Governor of Wisconsin | Core Retirement Investment Trust (a Wisconsin state public pension plan) | $75,000 |
| Registered Investment Adviser | $1,000 | Governor of Ohio | State Teachers' Retirement System of Ohio | $75,000 |
| Exempt Reporting Adviser | $1,425 to
candidate for Mayor (in three contributions from the covered
associate) $500 to different candidate for Mayor |
Candidates for Mayor of New York | (1) Teachers Retirement System of the City of New York, (2) New York City Police Pension Fund, (3) New York City Fire Pension Fund, and (4) New York City Employees' Retirement System | $100,000
|
| Registered Investment Adviser | $500 | Governor of Massachusetts | Massachusetts Pension Reserves Investment Management Board | $75,000 |
| Registered Investment Adviser | $1,000 | Governor of Illinois | Illinois Teachers' Retirement System | $75,000 |
This article is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By reading this article you understand that there is no attorney client relationship between you and the article author. This article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. (c) Perkins Coie 2017
