Investment Bank to Pay $12 Million for Pay-to-Play Violations
A large investment bank agreed to pay nearly $12 Million in disgorgement, interest, and penalties for violating the pay-to-play prohibitions when a senior banker worked for a gubernatorial campaign. The SEC alleges that the banker used firm resources and operated during work hours to assist the Massachusetts Treasurer’s campaign for governor. The SEC charges that his campaign activities constituted “in-kind” campaign contributions which required the firm to refrain from any municipal underwriting business in Massachusetts for two years. The SEC also charged the firm for failing to supervise because, although the firm knew of his political activities, the only supervision included a certification by the banker and general e-mail reviews. The firm was charged with violations of MSRB Rule G-37, which is the model for Rule 206(4)-5 under the Advisers Act. The SEC has also commenced enforcement proceedings against the banker.