SEC clamps down on political contributions

The SEC voted unanimously Wednesday to prohibit investment advisers who manage public pension funds from making large political contributions to state officials in charge of the funds, including selecting fund managers. Advisers will be limited to donations of $350 per candidate per election if they live in the state where the campaign is being waged and $150 contributions to out-of-state campaigns.

Under the new rule, advisers who violate the contribution limits cannot be paid by a pension fund for two years. They also can no longer bundle donations from others or political action committees to give to candidates or political parties.

The rule is designed to curtail so-called "pay to play" schemes in which advisers donate to political campaigns to curry favor with state officials.

Former State Treasurer Richard Moore was criticized during his 2008 gubernatorial campaign because he raised hundreds of thousands of dollars from fund managers doing business with his office.

State Treasurer Janet Cowell also raised hundreds of thousands of dollars from fund managers when she ran for the treasurer's office two years ago.

Both Cowell and Moore say their decisions were never influenced by contributors, but the appearance of taking money from managers doing business with the office still raised questions.

Cowell couldn't be reached for comment Thursday. She has been an outspoken supporter of public financing for campaigns to eliminate special interest money, but the state Senate recently stripped provisions for that from a pending ethics reform bill.

The SEC's new regulations are expected to take effect in 60 days, and compliance will be required six months after that.