ASA Backs SEC Plan to Scrap Outdated Pay-to-Play Rule, Calls for Same Fix in Municipal Market

WASHINGTON – The American Securities Association (ASA) today supported the U.S. Securities and Exchange Commission’s (SEC) proposal to repeal an outdated rule that penalizes investment firms when their employees make even small political donations. Under the rule, a firm can be barred from earning fees from a state or local government for two years if an employee donates to certain officials, whether or not the donation influenced anyone.

“The SEC is right to focus on real corruption instead of punishing people for exercising their constitutional right to political speech,” said ASA President and CEO Chris Iacovella.

Donations of a few hundred dollars can trigger the two-year ban, and the dollar limits haven’t been adjusted for inflation since 2010. To avoid the risk, many firms have barred their employees from giving to any state or local candidate at all. ASA noted that bribing public officials to win government business is already a federal crime.

ASA recommended that the SEC:

• Update the municipal market’s rule, including raising its $250 donation limit and adjusting it for inflation going forward.

• Make clear that enforcement will target actual corruption, not small, good-faith political donations.

• Let firms tailor their compliance programs to their real risks instead of following a one-size-fits-all checklist.

  
  

Read ASA’s full comment letter here.

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The American Securities Association (ASA) represents the retail and institutional capital markets interests of regional financial services firms who provide Main Street businesses with access to capital and advise hardworking Americans how to create and preserve wealth. ASA’s mission is to promote trust and confidence among investors, facilitate capital formation, and support efficient and competitively balanced capital markets. This mission advances financial independence, stimulates job creation, and increases prosperity. The ASA has a geographically diverse membership of almost one hundred members that spans the Heartland, Southwest, Southeast, Atlantic, and Pacific Northwest regions of the United States.