Last week, the state Republican committees of New York and Tennessee filed a lawsuit aimed at repealing a Securities and Exchange Commission (SEC) rule that limits the campaign contributions that can be made by investment advisers on Wall Street to political candidates. The rule is designed to prevent Wall Street from using campaign donations as a form of bribery against state officials who rely on these financial institutions to manage their investments.
Observers predict this could be the Supreme Court's next big campaign finance case. A lawyer for the plaintiffs said this year's McCutcheon decision, which struck down the aggregate limit on individual contributions to federal candidates, national political parties, and political action committees, laid the legal groundwork for the SEC challenge. The brief cites both McCutcheon and Citizens United in its argument, calling to mind warnings that dominoes are falling as the Supreme Court moves toward eliminating all limits on campaign spending.
Described by the SEC as a "time out," the 2011 rule bars an investment firm from managing a state’s assets for two years if the company, or certain employees, make more than a nominal campaign donation ($150-350) to a state official who has power over state contracts with investment advisers, such as those governing public pension plans.
Elected officials who allow political contributions to play a role in the management of these [public pension plan] assets and who use these assets to reward contributors violate the public trust. Moreover, they undermine the fairness of the process by which public contracts are awarded. Similarly, investment advisers that seek to influence government officials’ awards of advisory contracts by making or soliciting political contributions to those officials compromise their fiduciary duties to the pension plans they advise and defraud prospective clients. These practices, known as “pay to play,” distort the process by which advisers are selected.
Campaign finance reform advocates oppose any attempt to further weaken contribution limits or increase the influence of big money in politics.
NYC Wins When Everyone Can Vote!
Michael H. Drucker
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