Executives at investment firms that manage Chicago pension funds have since 2011 poured more than $600,000 in contributions into Mayor Rahm Emanuel's campaign operation and political action committees (PACs) that support him...
Same thing only different in North Carolina
with contributions to NC Treasurer Janet Cowell
from executives at investment firms doing business with the NC pension fund.
These contributions appear to flout federal rules banning companies that manage pension funds from financing the campaigns of officials with authority over pension systems, say legal experts.
...Since 2011, at least 31 executives at firms that harvest fees by managing city pension funds have contributed to his campaign and associated PACs.
...Former prosecutors, corporate compliance attorneys and erstwhile officials at the Securities and Exchange Commission describe the donations as a clear breach of the spirit -- and perhaps the letter -- of the SEC's so-called pay-to-play rule, which seeks to prevent pension investments from being doled out as a form of patronage to those who contribute to campaigns.
"The management of municipal pensions should be totally transparent and free of political influence,” former SEC chairman Arthur Levitt told IBTimes after the Chicago contributions were described to him. “The acceptance of contributions by city officials from advisers managing city funds, in my book, smells like bribery.”
...Former prosecutors and SEC lawyers say the Chicago situation exemplifies a troubling national trend: Mayors and governors are taking office through, in part, the largesse of financial services companies that bankroll their campaigns, then using their newfound authority over pension systems to put public money into the hands of their donors.
..."Elected officials who allow political contributions to play a role in the management of these assets and who use these assets to reward contributors violate the public trust," the agency declared in announcing the rule. "They undermine the fairness of the process by which public contracts are awarded... They can harm pension plans that may subsequently receive inferior advisory services and pay higher fees. Ultimately, these violations of trust can harm the millions of retirees that rely on the plan."
The rule specifically prohibits financial firms from earning fees from public pension funds if their executives make campaign donations to the public officials who can exert influence over pension investments.
Emanuel qualifies as such an official, legal experts told IBTimes, because he and his administration appoint trustees to the boards that manage the $23 billion in Chicago's six municipal pension funds.
The rule applies to contributions to officials like Emanuel both before and during the term of an investment...
...in June, the agency explicitly said the rule applies even when there is no proof that campaign contributions were part of a "quid pro quo or actual intent to influence an elected official or candidate.”
..."The SEC could not be more clear: They don't care about intent or the actual ability to affect public activity -- it is purely a relationship-based penalty," Stefan Passantino, who runs the political law team at McKenna, Long & Aldridge LLP, said. "The entire reason these laws exist is because legislators can't always prove there is a direct linkage between the giving of money and the request for official favors as is the case with bribery, so they ban the conduct entirely."
NC Treasurer Janet Cowell Contributions; "Law Firms Seek Cut of State Pension Litigation" and Pay to Play
"NC Pension Accused of Pay-to-Play Violations"
NC State Treasurer Janet Cowell's answer to the following question in 2012