June 30, 2015
Pay-to-Play Implications of Governor Chris Christie’s Presidential Run
After today’s announcement, New Jersey Governor Chris Christie joins a long list of 2016 presidential candidates, from both parties. But Christie’s position as a sitting governor means that he is subject to different campaign-finance rules than some of his opponents. In particular, under the Securities and Exchange Commission’s pay-to-play rules, investment advisors are subject to reduced contribution limits when making political contributions to a covered candidate or official—including any official who has authority to appoint members to government funds that select investment advisors. Governor Christie, who appoints members to the New Jersey State Investment Council, is covered by the SEC pay-to-play restrictions, even in a campaign for federal office. Similarly, the Municipal Securities Rulemaking Board has its own pay-to-play restriction that covers municipal-securities dealers. Under guidance issued by the MSRB, this rule applies to presidential campaigns of covered State officeholders. Covered municipal-securities professionals may therefore be subject to reduced contribution limits for Governor Christie’s presidential run. These pay-to-play restrictions apply not just to Governor Christie but may also apply to such other 2016 presidential candidates as Bobby Jindal, Scott Walker, and John Kasich—all sitting governors. For political prognosticators, it is worth considering how a presidential candidate from the northeast, who may expect extensive support from Wall Street, will fare when political contributions from the financial community are potentially governed by SEC, MSRB, and local pay-to-play rules. But it is equally important for the investment advisors and financial professionals themselves to keep these restrictions in mind, to ensure that their political contributions do not jeopardize their firms’ government contracts. Although there may be understandable excitement over a local presidential candidate, it is crucially important for investment advisors in New Jersey, Wall Street, and beyond to understand these pay-to-play restrictions and to abide by their limits.