IVCA-PAC Adopts New 'Pay-to-Play' Compliance Policies and Procedures

IVCA-PAC Adopts New 'Pay-to-Play' Compliance Policies and Procedures

March 30, 2011

Numerous recent regulatory changes have changed the dynamics of political contributions, specifically impacting firms in the investment industry. The most significant of these changes for IVCA-PAC and its supporters are:

-  A 2010 SEC rule designed to prevent influencing public pension decisions via political contributions by prohibiting both direct and indirect (e.g., through a PAC) contributions by an investment adviser to any official, including an incumbent, candidate or successful candidate, of a government entity who is directly or indirectly responsible for, or has the ability to influence, the awarding of advisory contracts.
-  A 2009 Illinois law prohibiting political contributions to statewide elected officials who have the ability to influence the awarding of government contracts by any entity whose contracts or pending contracts with the State of Illinois exceed a combined total of $50,000 annually.

In light of these and other pertinent rules, the IVCA-PAC Board has adopted new - œpay to play-  policies and procedures that ensure compliance consistent with SEC rules, Municipal Securities Rulemaking Board rules and Illinois law in an effort to ensure that continuing annual contributions to the PAC will not limit a firm's ability to access state and pension funding within its base of Limited Partners. The PAC Board sought the assistance of the three attorneys serving on the IVCA Legislative Committee - “ Michael Rosenthal of SNR Denton US, Saul Rudo of Katten Muchin Rosenman LLP and Bruce Ettelson of Kirkland & Ellis LLP. Their invaluable review and input into the newly adopted pay-to-play policy should provide additional confidence to our investing members that their continued support of IVCA-PAC will not affect their ability to access public pension funding.

Among other provisions, IVCA-PAC's new pay-to-play policy includes:

-  Limiting PAC contributions to Illinois state legislators (no federal, municipal or county contributions are allowed);
-  Prohibiting contributions to any official who is directly or indirectly responsible for or can influence the selection or appointment of an investment advisor by a government entity;
-  Maintaining a black list of offices and persons deemed to have, directly or indirectly, the legal authority to cause or can influence the awarding of an investment advisory contract. Currently in Illinois, the IVCA-PAC black list includes the following five such offices and one additional elected official on the list:
  • The Governor appoints pension fund board members (Pat Quinn).
  • The Treasurer serves on a pension fund board and invests the State's money (Dan Rutherford).
  • The Comptroller (Judy Baar Topinka) serves on the Illinois State Board of Investments (ISBI).
  • One member of the Illinois House (no one is currently filling this seat) serves on ISBI's Board.
  • One member of the Illinois Senate (currently Senator James F. Clayborne) serves on ISBI's Board.
  • Justice Thomas E. Hoffman of the Illinois Appellate Court serves on ISBI's Board.
-  Obtaining a written certification from each official that he or she is eligible to receive the contribution in accordance with the above; and
-  Providing written confirmations to those IVCA members who make contributions to IVCA-PAC that such contributions will be used in accordance with these policies.

IVCA members: To view IVCA-PAC's policy on pay-to-play and the certification letter for PAC recipients click here to logon (then click "IVCA-PAC" on left nav bar).