Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...
By Rob Tricchinelli
Jan. 7 — Thwarted in their legal challenge, the Republican parties from Tennessee and New York State are instead petitioning the Securities and Exchange Commission to repeal its pay-to-play rule.
The rule is “unconstitutional and unlawful” because it “limits the ability of investment advisers to make otherwise lawful political contributions,” the petition for rulemaking said.
The groups had challenged the rule in federal court, but the suit was tossed by the U.S. Court of Appeals for the District of Columbia Circuit in August because the groups waited too long to file (165 SLD, 8/26/15). Under federal statute, the challenge had to be brought within 60 days of the rule's adoption, but the New York Republican State Committee and Tennessee Republican Party waited roughly four years.
“We believe this petition is the next logical step to take on the matter,” Brent Leatherwood, executive director of the Tennessee Republican Party, told Bloomberg BNA Dec. 7. “The SEC's rule has long prohibited a particular set of Americans from fully exercising their rights. That's wrong.”
The rule prevents an investment adviser from managing state assets for two years if the firm, or certain executives, donate campaign money to state officials who make decisions regarding what companies are used to invest state money.
The rule also prohibits advisers from bundling money from other donors to give to those state officials. It was adopted in July 2010 (125 SLD, 7/1/10).
In their challenge, the Republicans argued that the SEC couldn't regulate political contributions because Congress has exclusive authority to do so. They also claimed the agency violated its statutory authority and that the rule ran afoul of the First Amendment.
Their Dec. 4 petition to the SEC raises similar issues.
“Citizens should be able to fully participate in the 2016 campaign free from a haphazard government mandate,” Leatherwood told Bloomberg BNA.
The SEC declined to comment on the petition. The Financial Industry Regulatory Authority proposed a similar rule in December for member firms, and the Municipal Securities Rulemaking Board has proposed rule changes for municipal advisers (248 SLD, 12/29/15)
“The GOP's relentless efforts to overturn ‘pay-to-play' protections are nothing more than a thinly veiled effort to help their candidates raise Wall Street money,” Letitia James, the public advocate for the City of New York, told Bloomberg BNA Dec. 7 through a spokeswoman.
“The Republicans' efforts jeopardize the integrity of our public pension system. Instead of playing politics with people's pensions, we should be strengthening campaign finance reform,” James said. The public advocate's office had filed a friend-of-the-court brief asking the court to uphold the SEC rule as part of the Republicans' legal challenge.
The New York and Tennessee Republicans are represented by Bancroft PLLC in Washington and Holtzman Vogel Josefiak Torchinsky PLLC in Warrenton, Va.
To contact the reporter on this story: Rob Tricchinelli in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Phyllis Diamond at email@example.com
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)