New Jersey School Board Elections are Around the Corner

Most New Jersey school districts will be holding their annual school board elections on Wednesday, April 27th. The New Jersey Election Law Enforcement Commission reports in White Paper #21 that overall spending on school board elections has doubled during the past decade to $9.6 million.

Without regard to pay-to-play restrictions, an individual or corporation may contribute up to $2,600 per election to a candidate running for school board in New Jersey.  Vendors are required to disclose contributions greater than $300 per election to a school board candidate on certain pay-to-play disclosure forms. 

Although contributions to school board candidates are generally beyond the scope of New Jersey’s statewide pay-to-play prohibition laws, school boards are authorized to adopt local pay-to-play ordinances.  Thus, before writing a check (in any amount) to a school board candidate, vendors should determine whether a local ordinance is in effect.

ELEC Business Entity Annual Disclosures Due Today Will Be Publicly Available on April 6

As discussed here, today is the filing deadline for ELEC’s 2010 Business Entity Annual Report.  Forms must be filed electronically on ELEC’s website

In a press advisory issued today, ELEC advised that 2010 reports will be publicly available on ELEC’s website on Wednesday, April 6.  

ELEC’s website provides the public with the opportunity to manually search the 2010 Form BEs by entering business information, contract information, contribution information or recipient information into a series of fields.  ELEC also provides the public with the opportuntity to view and search all records by using the quick data download option.

Oral Arguments in McComish v. Bennett Today

Today the Supreme Court hears oral argument on the constitutionality of Arizona’s public financing system, a case with  implications both local and nationwide.   The question presented:

Under the First Amendment is a state prohibited from giving additional money to a candidate who accepts state funding for her campaign where: (a) a group makes independent expenditures over a certain amount against the candidate; or (b) the candidate’s opponent refuses public funding and spends more than a certain amount on the campaign.

UPDATEHere is the oral argument transcript.

SEC Releases Staff Responses on Pay-To-Play Rule

On Tuesday the Securities and Exchange Commission issued staff responses to questions about Rule 206(4)-5, the pay-to-play rule which went into effect on March 14, 2011 as we described here and here.

There are several notable responses that provide additional guidance on the rule.  For example, in response to a question regarding contributions made by an adviser or a covered associate to a trade association PAC, which then makes a contribution to a candidate, the staff states that:

The PAC is a covered associate only if the adviser or any of its covered associates has the ability to direct or cause the direction of the governance or the operations of that PAC (see section II.B.2(a)(4) of the Adopting Release).  However, a chain of contributions through PACs made for the purpose of avoiding the pay to play rule, would violate the rule’s, and section 208(d) of the Advisers Act’s, general prohibitions against doing anything indirectly which would be prohibited if done directly (see rule 206(4)-5(d)).

Additionally,  the response to question V. I states that the SEC rule does not preempt state and local pay-to-play rules.

While the staff responses are not official regulations of the SEC, they nevertheless provide useful guidance.

SEC Pay-to-Play Rule Takes Effect Today

The Securities and Exchange Commission’s (SEC’s) new pay-to-play rule takes effect today.  The rule restricts the state and local political activities of investment advisers who work with state and local pension funds.  See this post for more information on the new rule.  Given the number of local pay-to-play laws and ordinances already in place around the country, in addition to amendments already proposed for these new rules, compliance with the SEC’s new rules requires careful preparation.

The new rule covers a broad spectrum of employees.  “Covered Associates” include the adviser’s general partners, managing members, executive officers, and other individuals with a similar status or function.  Any employee of the adviser who solicits government entity clients for the investment adviser and any supervisor of any such employee are also covered associates.  Additionally, any PAC controlled by the investment adviser or any of the adviser’s covered associates are included in the definition of “covered associates.”  Note that the SEC proposed rules in November 2010 that may ultimately change the scope of individuals covered by the rule.  Nevertheless, the first step for compliance is identifying employees covered by the rule.  We also recommend making sure any affiliated PAC contribution policies are amended accordingly.

Covered employees also need to be aware of which officials are covered by the rules.  “Covered officials” include an incumbent, candidate or successful candidate for elective office of a government entity if the office is directly or indirectly responsible for, or can influence the outcome of, the selection of an investment adviser or has authority to appoint any person who is directly or indirectly responsible for or can influence the outcome of the selection of an investment adviser.  Accordingly, creating awareness of the restrictions applicable to employees through a corporate political activity policy and in-house seminars is crucial to compliance.  And since the rule requires registered advisers to maintain records of the political contributions made by advisers or covered executives and employees, it is also important to set-up a vetting policy to make sure the advisor is able to maintain proper records.

NYC Campaign Finance Board Holds Hearing Today on Independent Expenditures

As we previously noted, last November NYC voters  passed an amendment to the City Charter requiring disclosure of independent expenditures .  Today the CFB is holding a hearing on the topic to inform its future rulemaking.  Here is testimony submitted by Laurence D. Laufer.

Update: New York Times coverage.

Paterson Transitional Aid Pay-to-Play Ordinance Goes Into Effect

Earlier this year, a number of New Jersey municipalities were required to begin the process of adopting stringent pay-to-play ordinances because they accepted transitional aid from the State of New Jersey.

Over the past two months, several ordinances have gone into effect. Most recently, on March 6, 2011, the City of Paterson’s transitional aid pay-to-play ordinance went into effect. Like most of the transitional aid ordinances, the City of Paterson’s Ordinance covers no-bid contracts with the City. No exception exists for contracts awarded pursuant to a “fair and open process”. The ordinance contains reduced limits during the 12 months prior to a contract award and an absolute ban on contributions (in any amount) during the term of a no-bid contract with the City.

In addition to covering contributions to Paterson recipients, the ordinance also covers contributions to Passaic County party committees and PACs/CPCs that regularly engage in the support of Paterson and/or County of Passaic elections. The ordinance covers contributions by the vendor itself and certain individuals associated with the vendor. Contributions by a vendor’s affiliates, subcontractors and consultants may also be covered. Paterson’s new transitional aid ordinance is more stringent than the pay-to-play ordinance which the City enacted last spring. Unlike the North Arlington transitional aid pay-to-play ordinance, the Paterson ordinance does not contain a Sunset provision.

As transitional aid pay-to-play ordinances, like the one enacted in the City of Paterson, begin to roll out across the state, vendors that contract with and/or wish to contract with covered municipalities should become familiar with the ordinances to preserve their eligibility for municipal contracts.

Public Hearing on Independent Expenditures in NYC Elections

Last November, New York City voters adopted a Charter revision proposal to require public disclosure of independent expenditures in City elections. Now comes the hard part: adopting rules to flesh out just what these new disclosure and disclaimer requirements will really mean for individuals, organizations, corporations, political committees, labor unions, and others who want to speak out about elected officials and candidates in the days and months before an election.

The City Campaign Finance Board wants to know what you think. On Tuesday, March 10, from 11 a.m. to 2 p.m., it will hold a public hearing to gather information to inform its future rulemaking. The CFB recommends consideration of the following issues in preparing testimony:

• Scope of regulated activity. Should the requirements apply to communications containing express advocacy, or also to those that refer to a clearly identified candidate (or ballot measure) shortly before an election?

• Required information. What information should an independent spender be required to disclose about itself, its funding sources, and its vendors? Within what timeframe should this information be reported to the Board?

• Exemptions. Should certain communications or actors be exempt from the disclosure rules? Should certain contributions, such as those earmarked for a specific non-political purpose, be exempted from source disclosure rules?

• Enforcement. How should the Board uncover potential violations of the disclosure rules? Should it rely on complaints only, or initiate investigations of unreported activity?

• Disclaimer requirements. Should the disclaimer/identifier on the face of the communication be subject to language, font size and placement requirements? Should certain communications be exempt from such requirements?

• Outreach. How can the Board best conduct outreach and training to potential independent spenders once the independent expenditure rules are approved?

Federal Contribution Limits Increase for the 2011-2012 Federal Election Cycle

Earlier this month, the Federal Election Commission (“FEC”) released new limits for the 2011-2012 federal election cycle.  Federal contribution limits are indexed for inflation in odd-numbered years. The increases for the 2011-2012 election cycle demonstrate a modest increase  from the previous cycle.

For example, individuals may now give up to $2,500 per election to a federal candidate committee and up to $30,800 per calendar year to a national political party committee. The aggregate biennial limit for individuals has also increased to $117,000 to all federal recipients. Out o f this $117,000, an individual may contribute up to $46,200 in the aggregate to all federal candidates and up to $70,800 in the aggregate to all federal party committees and political action committees.

The increases for the 2011-2012 cycle do not include an increase in permissible contributions to federal PACs. Like the previous cycle(s), the limit is still $5,000 per calendar year.
Perhaps the biggest change, however, and a change not reflected on the FEC‘s contribution limits chart is that pursuant to Advisory Opinions issued over the summer, individuals may now make unlimited contributions to independent expenditure PACs. As previously discussed here, these opinions open the door for Independent Expenditure Only PACs to receive unlimited contributions from individuals, corporations and labor unions. Federal campaign finance law still prohibits corporations and labor unions from making contributions to candidate committees, party committees and federal PACs that are not organized as Independent Expenditure Only PACs.

NY Administrative Board of the Courts Adopts Contribution Rule

According to the NY Times, Judge Jonathan Lippman will announce the adoption of a new rule at his State of the Judiciary address tomorrow, which will purportedly bar attorneys who have contributed $2,500 or more and firms that have donated $3,500 or more to a judicial candidate from appearing before that judge for two years.

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