Many financial services companies contract with states or municipalities to manage public pension funds or provide other financial services. Accordingly, these companies are subject to the state and local pay-per-play laws described above. But that`s not the end of the story. Financial services firms may also be subject to federal pay-per-play regulations, which may result in a two-year ban on paid activities if the firm or its affiliates make a political contribution to a licensee or candidate who directly or indirectly has the decision to hire the firm. These include: The most common type of paid legislation restricts or prohibits political contributions. As described above, the companies and individuals subject to the ban or restriction are very different. The period during which contributions are limited also varies. Many jurisdictions, such as New Jersey and New Mexico, include a “retrospective” provision whereby contributions made during a certain period prior to contract award exclude the bidder from receiving the contract or require disclosure as part of the bidding process. Other jurisdictions, such as Connecticut and the City of Philadelphia, enforce a contribution ban for a period of time after full performance of the contract or until the public official (e.g., the mayor) has completed his or her term.
To promote transparency and fairness in government decision-making, rules are in place to prevent public servants from being unfairly influenced by contributors to their campaigns. The type of activity these laws were enacted to limit is often referred to as “pay-to-play.” In recent years, federal agencies and many states and municipalities have passed so-called “pay-to-play” laws that limit political contributions from state and local government contractors. Generally, these laws provide that campaign contributions and political fundraising activities conducted by a company, its officers, certain employees or family members of officers and employees prevent the company from obtaining a government contract. Some of these laws also require contractors to submit reports to government agencies that have identified contributions covered by policies. Violations during the term of a national or local contract may also result in fines, contract forfeiture, and collection of compensation received under the contract and other penalties. Covington is pleased to offer the survey in its entirety for purchase. Alternatively, individual states or groups of states may be made available at reduced prices. If you have any questions or would like to purchase the survey, please contact firstname.lastname@example.org The Securities and Exchange Commission`s pay-to-the-game rule is particularly broad, covering national and local political contributions from investment advisors, certain officers and employees, and their PACs. In addition, municipal investment dealers are subject to Rule G-37, a pay-per-play rule imposed by the Municipal Securities Regulatory Commission. And commodity swap traders can be covered by the Commodity Futures Trading Commission`s pay-to-play rules. In addition, many national and local pension funds, as well as national and local authorities, have their own pay-to-play rules.
To help in-house attorneys and compliance professionals make these decisions, Covington annually updates a detailed overview of the paid laws of all 50 states and several cities and counties. This 400-page survey: As previously noted, the District of Columbia recently implemented gambling payment restrictions that prohibit a contractor from making contributions to the agent responsible for awarding its contract, as well as to any PAC or constituent service program associated with that agent and any candidate for that covered position. The client`s senior managers are also subject to the prohibition. Violations of the law can result in termination of existing contracts, a four-year ban on seeking future contracts (including renewal of existing contracts), civil penalties, and inclusion on a public list of violations. Maryland has had a paid law for many years that requires state contractors to register and file reports of political donations to state and local candidates. Since 2015, the law has been in flux, with legislators and regulators drafting and rewriting requirements, creating a complex reporting system. In addition, we recommend a regular review of databases for campaign publications. Under some pay-to-play laws, no penalty is imposed if an illegal contribution is detected and refunded within a prescribed time frame. We have helped many clients develop and implement paid compliance programs, which often include pre-approval procedures for political contributions. Our biannual state- and local-level pay-to-play survey provides a comprehensive overview of pay-to-play laws in states and major municipalities, as well as pay-to-play policies that many public institutions and pension funds have in place. Several states have upcoming reporting requirements regarding pay-to-play regulations: Once you`ve determined that certain pay-to-play laws apply to your business, the next step is to determine which affiliates and companies are affected.
Most pay-for-play laws apply to the principal`s officers, as well as to persons whose ownership interests exceed a certain level. Other laws apply to employees representing the contractor in negotiations with government agencies and their supervisors. It is also common for pay-to-play laws to include anti-circumvention provisions by applying contribution restrictions to parent and subsidiary companies, lobbyists or spouses, and other family members of covered owners, officers and employees. If you need help determining your obligations under pay-per-play laws or developing a compliance program, Vable`s Political Law firm can help. Pennsylvania requires companies subject to fee-based disclosure requirements to file an annual report with the secretary of state by Feb. 15. An effective compliance program can significantly reduce the risk associated with paid laws. It starts with a review of where the company does or seeks to do business and where the covered staff is located. From there, companies should conduct a risk assessment, which can range from analyzing a single jurisdiction or business entity to conducting a company-wide legal review, depending on the scope of your government contracts and other activities.
Fee-based laws regulate the political contributions of individuals seeking or holding government contracts. In many cases, these laws also cover contributions from individuals and entities associated with government contractors, such as officers, directors, suppliers, and family members. The number of jurisdictions and public institutions that have adopted pay-per-play laws or policies continues to grow. Wiley advises clients on compliance with these complex pay-to-play laws at the federal, state, local and government levels.