Court Urged to Uphold SEC's Rules
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 D.C. Circuit Court of Appeals to reject the latest challenge to pay-to-play laws brought by the state Republican parties of New York and Tennessee.
On September 30, 2014, the U.S. District Court for the District of Columbia dismissed the challenge brought by the state Republican parties for lack of subject matter jurisdiction, agreeing with the SEC that the D.C. Circuit Court of Appeals was vested with jurisdiction to hear the challenge to the play-to-play rule. The parties have now filed a petition with the D.C. Circuit Court of Appeals.
The SEC rule being challenged bars investment firms from managing state assets, like pension funds, 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.
“The courts have long recognized the danger of quid pro quo corruption inherent in the awarding of government contracts and has upheld pay-to-play laws against a variety of challenges over the decades,” said Tara Malloy, Campaign Legal Center Senior Counsel. “Pay-to-play laws serve the vital public interest in protecting the integrity of government and the public’s faith in its elected officials. The extensive list of pay-to-play corruption in the awarding of exactly these types of state investment contracts is jaw-dropping in both its scale and geographic distribution, 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. In addition to the egregious example out of New York State, the record further cites similar prosecutions in Connecticut, Florida, Illinois, New Mexico and Ohio.”
To read the brief filed today, click here.
To read the District Court’s memorandum opinion and order dismissing the case, click here and here.