Tennessee Republican Party vs. SEC
The state Republican parties of New York, Tennessee and Georgia challenged an important safeguard that prevents pay-to-play practices in municipal advisory services. The rule adopted by the Municipal Securities Rulemaking Board (MSRB) bars investment firms from soliciting government business for its municipal financial advisory services for two years after a firm or its associates make more than the legal minimum contributions to state or municipal officeholders who have influence over the award of such advisory contracts.
In its amicus brief, CLC argues that the state parties challenging the rule are ignoring extensive evidence of pay-to-play activity at both the federal and state levels, and the self-evident risk that allowing a municipal advisor to make substantial campaign contributions to officeholders with control over awards of municipal advisory business will give rise to corruption, or at a minimum, the appearance of corruption. The rule was adopted to ensure high standards of integrity in the municipal securities market and to prevent conflicted officials from awarding municipal advisory business to those who “pay to play.”
Petitioners filed their merits brief on Nov. 16, 2016 and respondents filed their brief on Dec. 19, 2016. CLC filed a friend-of-the-court brief on Dec. 23, 2016, urging the Sixth Circuit Court of Appeals on to reject the challenge to the rule. Oral argument was heard before the Sixth Circuit May 4, 2017.
UPDATE: On July 13, 2017, the Sixth Circuit decided not to take the case because it lacked standing. This means that the rule will stand.