You could have lots of complaints about the SEC but a fun niche one is that they trample on our fundamental American liberties like the freedom of speech. So, for instance, if you’re an investment manager you can’t really go around telling people how awesome you are at investment managing, even if you are in fact awesome at investment managing. The JOBS Act is changing that, at the margins, and I suggest that you show your support for freedom and American values by advertising on Dealbreaker.
But not by giving money to Mitt Romney! Because of this story in the Journal about how it’s hard for people employed on Wall Street to give money to him, at least in large quantities. The problem is that if you want to give him lots of money you run afoul of contribution limits so you have to instead give money to state Republican committees which, in a clever move, are in uncompetitive states so they can just shuffle money around to his national campaign, and his people will even handle the paperwork for you:
The effort, the Romney Victory fund, was announced earlier this month. It asks donors to give as much as $75,800, including donations to Mr. Romney’s primary and general-election efforts and the Republican National Committee.
Some $40,000 of an individual’s $75,800 contribution would go to state GOP accounts in Idaho, Massachusetts, Oklahoma and Vermont — the legal maximum of $10,000 for each. These funds are intended to help the Romney presidential campaign.
All of this money-laundering-ish stuff is fine and if you are non-financially-employed and have $75K feel free to give it to Romney in appropriately structured amounts. Or give it to Obama, he’s got a similar machine built on the same principles; the shenanigans are bipartisan though presumably if you’re giving to Ron Paul you have to send your donation in gold bullion and not use the post office.
But where you run into problems is with an SEC rule that “prohibits an investment adviser from providing advisory services for compensation — either directly or through a pooled investment vehicle — for two years, if the adviser or certain of its executives or employees make a political contribution to an elected official who is in a position to influence the selection of the adviser.” Similar rules for muni-bond underwriting basically mean that employees of banks and investment managers can’t give money to state politicians’ campaigns, or they’ll lose their ability to underwrite bonds or manage pensions for those states. The rules are in place because state politicians have kind of a crappy record of being bribed into giving pension management and/or placement-agent contracts to their buddies and/or whoever is bribing them (oh look!).
So it turns out that if you work for an investment manager or bank, washing your money through state committees would get you in trouble not for the washing but for imaginarily influencing decisions of the state politicians who don’t receive the money because it’s going right to Mitt. Who, btw, is helpfully unemployed – had he been, say, a current governor, he’d be even more screwed:
“It is the law of unintended consequences,” said William Canfield, the general counsel for Mr. Perry’s unsuccessful White House bid. “‘Pay to play’ was intended to be a restriction on people who wanted to gain access to decision makers at the state and local level.”
Ha! It was never intended to be a restriction on people who wanted to gain access to decision makers at the national level!
People in other industries – the Journal has a handy chart suggesting that the main industry employing campaign donors is retirement, which sounds about right, though lawyers, real estate, and “business services” feature prominently on both sides – are less constrained. While some states have pay-to-play laws that expand the SEC’s rules to non-pension-management contractors, the SEC is unusual in regulating state campaign contributions on a national level, and thus trapping anyone who wants to contribute large gobs of money to Romney’s campaign. Outside of securities regulation, our society seems to have settled (right? this is uncontroversial, right?) on the conclusion that campaign contributions are speech and corporations are people. But the poor financial industry corporate people don’t have the same constitutional rights as all of their fellow corporate people. No wonder they feel so oppressed.
Pushback for Romney Fund [WSJ]
SEC Charges Former CalPERS CEO and Friend With Falsifying Letters in $20 Million Placement Agent Fee Scheme [SEC]