District Court Urged to Uphold SEC’s Pay-to-Play Rules Covering State Investment Funds
Today, the Campaign Legal Center, joined by Democracy 21, filed an amici brief in New York Republican State Committee v. Securities and Exchange Commission (SEC) urging the U.S. District Court for the District of Columbia to deny a preliminary injunction and dismiss the latest challenge to pay-to-play laws.
The state Republican parties of New York and Tennessee are challenging an SEC rule barring investment firms from managing state assets for two years after a firm or its associates make more than de minimis contributions to officeholders or candidates who have or would have power to award investment contracts.
The rule was implemented after SEC and state investigations uncovered extensive evidence of fraud in the award of state investment contracts. One such scheme involved former New York State Comptroller Alan Hevesi, who was ultimately convicted of steering $250 million in pension funds to an investment firm in exchange for gifts and more than $500,000 in contributions.
“SEC and state investigators have prosecuted a long and sad laundry list of quid pro quo corruption in the awarding of state investment contracts to major donors,” said Tara Malloy, Campaign Legal Center Senior Counsel. “Despite the claims of the state parties that the SEC cannot provide extensive evidence of quid pro quo arrangements between government officials and investment advisers, the record cites prosecutions in Connecticut, New Mexico, Illinois, Ohio, and Florida, as well as New York. Pay-to-play laws are a vital bulwark helping to maintain the public’s faith in its government and its elected officials. The courts have long recognized the vital public interest served by such laws.”
To read the brief, click here.