Pay to Play Rules in 2016 Election

 

 

Linda F. Beckmann
Managing Member
August 22, 2016

As Mike Pence is currently Governor of Indiana and has authority over the Indiana Public Retirement System and the Indiana Education Savings Authority, contributions to the Trump campaign may violate pay to play rules for firms that do business with, or seek to do business with, those plans. As the rule also prohibits a person from doing indirectly what the person would have been prohibited from doing directly, payment to a political action committee (“PAC”) or political party that is soliciting funds to support an official could be treated as a contribution made directly to the official.

Therefore, contributions to the Trump/Pence campaign, the Republican Party, or to a PAC supporting the Trump presidential campaign may trigger a “time-out” from receiving compensation for providing advisory services to a government entity client for two years after the adviser or a “Covered Associate” has made a contribution to an “official” of the government entity. Don’t forget the “look-back” provision of the rule either when hiring new employees.

Covered Associates may make aggregate contributions up to the de minimis amounts without triggering the “time-out.” In an election where a Covered Associate may not vote for the candidate, the limit is $150, and in an election where a Covered Associate may vote for the candidate, the limit is $350.

Be sure to review your pay to play policies and procedures with your firm’s Covered Associates, particularly if you have Indiana government entities as clients now, or hope to have them within the next two years! The SEC will be looking at this area very closely!