On September 27, 2012, the SEC charged a large investment banking institution and one of its employees with “pay-to-play” violations regarding campaign donations that were not disclosed to Timothy P. Cahill, who was, at the time, a candidate for governor of Massachusetts.

Pay-to-play restrictions are meant to curb payments by industry to government officials that are in a position to award contracts to private industry. This action is the first charge by the SEC involving in-kind contributions to a political campaign.

The SEC’s order states that a vice president at the investment bank solicited business from Mr. Cahill, as well as participating in Mr. Cahill’s political campaigns, sometimes conducting campaignrelated business from his offices at the investment bank. Specifically, the SEC is charging that use of the investment bank’s valuable resources while conducting campaign-related business constitutes in-kind contributions to the campaign, which should have disqualified the firm from receiving underwriting business attributable to Mr. Cahill. Nonetheless, the investment bank engaged in significant such underwriting activities.

SEC Charges Goldman Sachs and Former Vice President in Pay-to-Play Probe Involving Contributions to Former Massachusetts State Treasurer, SEC Press Release No. 2012-199 (September 27, 2012), available at http://www.sec.gov/news/press/2012/2012-199.htm.