Though the Presidential Elections are over, campaign contributions remain in the news, and fund managers should take precautions to avoid political contribution missteps. In this video, we discuss key considerations that fund managers need to think about.

Under both SEC and state rules, employee political contributions can create conflicts of interest for managers that market to public pension plan clients. Both the SEC and state regulators vigorously enforce these rules during and immediately after elections.

SEC enforcement is two-pronged:

  • “Strict liability” cases focused on compliance violations with the Dodd-Frank-era pay-to-play rules. The SEC Division of Enforcement has a long-standing initiative to monitor records from Secretaries of States offices, clerk offices on potential identities of broker-dealer and investment adviser employees who may have made political contributions and match that with potential non-compliance with the rule.
  • Classic fraudulent quid pro quo cases where managers or brokers seek (or are asked) to provide favors in return for pension fund business.

One particular challenge is that each state has its own rules– industry participants need to have a 50-state strategy to compliance. In the video, Suzan Rose also emphasized that the time is now for employers to ensure that all employees have reported relevant activities related to political contributions in order to avoid being considered ‘bad actors.’


Peter K.M. Chan is a member of Baker McKenzie’s North American Financial Regulation and Enforcement Practice, which provides our clients with a full range of regulatory advice and enforcement counseling. Peter brings two decades of experience at the US Securities and Exchange Commission (SEC) to his litigation and counseling work. His tenure at the SEC, as well as a stint as Special Assistant US Attorney in the Northern District of Illinois, have given Peter experience with civil and criminal matters.


Karl Paulson Egbert advises asset managers and their funds on regulatory, corporate and derivatives matters. Karl is a member of the Firm's North American Financial Institutions Steering Committee. Karl has practiced in New York, London, Hong Kong and Washington, D.C., working on fund formation, listed funds, private equity and capital markets transactions.