Pay-to-Play Rule

An adviser may not receive compensation for providing advisory services to a government entity within two years after a contribution to an official of that entity by the adviser or one of its covered associates. A de minimis exception covers contributions by a natural person of up to $350 per official per election where the contributor was entitled to vote for that official, and $150 where they were not. The rule separately prohibits soliciting or coordinating contributions to such officials, and payments to state or local political parties where the adviser is providing or seeking to provide services, and reaches anything done indirectly that would violate the rule if done directly.

• 01The de minimis is per official per election, so a primary and a general are separate ceilings.
• 02Entitlement to vote decides which ceiling applies, and nothing else does.
• 03There is no de minimis for a contribution by the adviser itself.
• 04Soliciting or bundling is a separate prohibition and bites at a zero-dollar contribution.

• No pre-clearance, so the first the firm hears of a contribution is after the time out has attached.
• Covered associate population that leaves out people who solicit government entities.
• New hires onboarded without the look-back: under (a)(1) a contribution made up to two years before someone becomes a covered associate counts, or six months where they will not solicit clients ((b)(2)).