Political Contributions (Pay to Play)

Overview

"Pay to play" generally refers to the practice of making payments in return for business or other benefits. The term is particularly used to refer to political contributions (which need not be cash payments) that are made with the hope of gaining business from governmental entities. This page is focused on the prohibitions adopted under the securities laws and the Commodity Exchange Act against such improper political contributions. Broadly speaking, the pay-to-play rules are another form of anti-bribery rules. See also the topic pages on Sales Contests and Non-Cash Compensation, on Reciprocal Dealings or Shelf Space and on Gifts and Entertainment.

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Governing Rules

  • Investment Advisers
  • IAA Rule 204-2(a)(18) (Recordkeeping as to political contributions)
  • IAA Rule 206(4)-5 (Political contributions by investment advisers)
  • Broker-dealers
  • FINRA Rule 2030 (Engaging in distribution and solicitation activities with government entities) 
  • FINRA Rule 203 (Application to capital acquisition brokers)
  • FINRA Rule 4580 (Records relating to government activities)
  • Municipal Firms
  • MSRB Rule G-8(a)(xvi) (Municipal recordkeeping)
  • MSRB Rule G-37 (Political contributions as to municipal securities business)
  • Swap Dealers and Security-Based Swap Dealers
  • CFTC Rule 23.450 (Swap dealers doing business with special entities)
  • CFTC Rule 23.451 (Political contributions by swap dealers)
  • SEA Rule 15Fh-5 (Security-based swap dealers doing business with special entities)
  • SEA Rule 15Fh-6 (Political contributions by security-based swap dealers)