Performance Fee Thresholds for Investors to be Raised by the SEC

High net-worth investors will enjoy lower fees?that is, if the Securities and Exchange Commission?s (SEC?s) proposed changes to performance based fees proceed as planned. The SEC intends to increase the dollar thresholds investors must meet before financial professional can charge them performance based fees. Currently, the thresholds are determined under two provisos of Rule 205-3 of the Investment Advisers [...]

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Loans against assets

        ASSETS = $   Just about anything of significant value can serve as collateral for a Loan. OUT OF GROUND ASSETS Precious Metals-Gold/Silver/Platinum, etc. Precious Stones, Gems, Rubies Emeralds, Diamonds, Sapphire. Rare Coins, Museum Quality Antiques & Art works. NOTE ON GEMS (We can not lend on any Gems that are [...]

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California takes on CalPERS - Causing CalPERS to Respond to California

One of the most prominent public displays of the once secretive world of pay-to-play in recent history surrounded the California Public Employees' Retirement System (affectionately referred to as “CalPERS”). As many will recall, CalPERS’ board of directors was subjected to significant scrutiny as a result of investigations in New York that demonstrated an all-too comfortable secret relationship between placement agents, investment firms, and public retirement systems. In California, CalPERS came to learn that several placement firms led by a former board member had received millions of dollars in service fees for helping certain investment firms land contracts to manage their f unds.

As sure as night follows day, public political scandal inevitably begets additional legislation; even if the genesis of the scandal was already illegal before coming to light. One of the easiest ways to accomplish a desired move towards transparency is to identify some new form of private interaction with government and label it “lobbying”. California’s response to the CalPERS scandal is no exception. Earlier this year, the California General Assembly enacted Assembly Bill 1743 designed to make placement agents for public retirement systems register as lobbyists and comply with all attendant restrictions, registration and disclosure requirements.

To show it was serious, Assembly Bill 1743 imposes additional criminal sanctions upon California’s existing regulatory scheme for lobbyist disclosure.

The legislation enjoyed considerable support from the California State Teachers' Retirement System (CalSTRS), other municipal public employees unions and good government groups. The legislation passed through both state legislative bodies this past August before being signed into law by Governor Schwarzenegger on September 30, 2010. As a result the bill is set to take effect on January 1, 2011.

Perhaps a day late, and surely a dollar short, CalPERS has announced that it will now require contractors to reveal whether they are using placement agents to seek business with the pension fund. CalPERS has further required that those using such agents must disclose payment terms, any “financial or familial” relationship with current or former board members, as well as any gifts or other items of value offered to CalPERS.

Consider the CalPERS barn door officially closed.
 

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Aviation Recruitment: What Companies Must Know Before They Hire

A few years back, the aviation industry looked like it was in turmoil. Profits were dropping and it seemed impossible that all but the largest carriers would survive the phase. But, the upswing for the aviation industry has begun recently and as you may know most aviation companies are in the process of recruiting large [...]

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Aviation Recruitment: What Companies Must Know Before They Hire

A few years back, the aviation industry looked like it was in turmoil. Profits were dropping and it seemed impossible that all but the largest carriers would survive the phase. But, the upswing for the aviation industry has begun recently and as you may know most aviation companies are in the process of recruiting large [...]

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Friday News (06.10.2011)

Despite the Texas Governor’s veto in late May of a bill that would have closed a major sales tax loophole for online retailers like Amazon.com, the Texas House of Representatives fires back by refusing to take the issue off the table. Another Austin-based company is about to go public.  That makes six (6) Austin companies to file for an IPO this year. Scary NY Times blog post on why Timothy Geithner, U.S. Treasury Secretary, may be operating on some misguided assumptions. The Economist suggests that

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A Thoughtful Response to a Past Blog Exchange: Is the "Stick" of Regulation Preferable to a Disclosure Scheme?

 This week, CityEthics.org analyzed a past exchange that occurred between Common Cause Georgia and the Pay to Play Law Blog that centered on our competing views as to the most effective means of ensuring public confidence in a workable scheme to prevent pay-to-play practices.

Their post is a thoughtful and lengthy analysis of the strengths and weaknesses of the “disclosure only” vs. “government regulation and debarment” schemes emerging throughout the country. Founded as they are by former prosecutors and ethics commission officials whose self-statedmission is to foster such laws as the means “to combat corruption and establish ethical local governments”, it is not surprising that CityEthics.org has reached the conclusion that “[d]isclosure is not an effective solution.”

Notwithstanding the difference in perspectives between the authors of the CityEthics.org site and the contributors to this blog, who view pay-to-play enforcement issues from the perspective of those required to establish compliance programs to comply with such laws and their oft-unintended consequences, the City Ethics post provides a solid recitation of the issue from the perspective of the regulating community and I recommend that you read it. Personal ego impels me, however, to respond to a few of the post’s assertions about the viability of a strict “government prohibition” solution as well as to defend the motivations of those who believe, as we do, that a scheme based on disclosure often accomplishes the same worthwhile goals without the burden of occasional draconian unintended consequences.

The differences in perspectives tend, in large part, toward the tension between what we aspire to achieve and what can realistically be drafte d, enforced, and complied with in a real world where enforcement and corporate compliance resources are limited, free speech is respected, and basic human interactions occur between those somehow associated with vendors and those on a public payroll.

The universal and noble goal of pay-to-play laws everywhere is to prevent corruption that can occur at the intersection of private sector benefits (in the form of gifts and contributions) on the one hand, and the award of government contracts on the other, in an environment in which existing laws to prevent such corruption are deemed unworkable because of the difficulty in proving the quid pro quo connection between the two required to make a criminal case. Jurisdictions adopting pay-to-play laws do so upon reaching the conclusion that such laws are necessary to prevent any potential or perceived linkage that can not be proven but that we all know exists to some degree.

Some such solutions, such as those offered by CityEthics.org, overreach to ban even the most fundamental freedoms of speech and association as a means of ensuring that such linkage not occur (“many jurisdictions require contractors to disclose what they do, and yet contractors keep giving large contributions anyway” and “[t]he same people who oppose restrictions on contractors making campaign contributions also oppose giving money to publicly funded candidates running against wealthy candidates”). Even if we were to conclude that such solutions were the most effective and narrowly tailored available to the problem of unprovable quid pro quo corruption, such laws can become impossible to enforce in the real world. As many jurisdictions have already learned, once one embarks down the path of prohibiting contributions by corporations and their “agents”, one has placed one’s hind-quarters squarely on the proverbial slippery slope. To prevent circumvention of a law by those few bad actors determined to gain an advantage, one must legislate prohibitions against otherwise lawful conduct by a vast array of potential agents (directors, directors’ spouses, relatives, domestic partners, etc). As states such as Colorado have learned, to cast a net wide enough to prevent circumvention one often does so at the expense of the constitutional rights of innocent parties and always at the expense of lawful businesses who simply want to follow the law.

My personal belief is that it is not realistic to conclude, as CityEthics.org does, that corporations “already have excellent compliance programs to deal with these matters” or that those smaller companies which do not “would, in this sense, be at a disadvantage but, luckily, they have many fewer individuals to keep track of.” If this premise is wrong, and our experience working with the private sector tells me it is, a less draconian impediment to legal, but arguably unseemly conduct, than loss of one’s ability to do business with government, is likely appropriate.

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WHY GLI?

Consider Our Track Record?
? During the one of the gravest legal markets in recorded history, GLI increased its performance.
? We have been party to thousands of legal placements ? associates, counsel, partners, group acquisitions AND firm mergers.
? During our tenure, GLI has had the awesome responsibility of opening many branch offices for some of the [...]

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?Soft bounce? in entry level associate hiring, NALP reports

By Karen Sloan
March 16, 2011
Copyright 2011. ALM Media Properties, LLC. All rights reserved. National Law Journal Online
Page from: http://www.nlj.com
——————————————————————————–
The employment picture is looking up for recent law grads ? at least a little bit.
New figures from the National Association for Law Placement (NALP) show that offer rates to summer associates rose from the historic low [...]

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Byron Bay Holiday Rentals

In visiting a foreign land, you will need a place to stay. Your accommodation will greatly depend on your budget and personal choice. You will probably look for a nice looking motel and stay there for the duration of the vacation. But there are many accommodation choices, and a hotel is only one of them. [...]

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Costs Associated with Investing in Mutual Funds

If you?ve invested in mutual funds, you should know that taxes can affect your investment, sometimes significantly reducing your net returns. To completely avoid federal taxes, consider investments such as tax free municipal bonds. Also be aware that some mutual fund investments are more tax efficient than others. Below is some basic information regarding mutual [...]

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Some Nice Recognition

Sometimes writing blog entries can feel somewhat like chopping trees in the forest. If you're not sure whether anyone heard you yell "timber!" did you really chop that tree down?

At least it looks like someone is reading. The Pay-to-Play Law Blog was recently given the #1 ranking by the Legal Studies Blog in its posting of the "Top 50 Excellent Blawgs You Aren’t Reading Yet". Let’s shoot for #1 "Blawg You Are Reading" in 2011! Tell your friends!

Read the full article and check out some other blawgs you may not know about yet.

I guess I can take solace in the fact that the blog's entries will stick around for a while even if it’s one "You Aren't Reading Yet". Yesterday I was advised that the United States Library of Congress has selected the Pay-to-Play Law Blog for inclusion in the historic collection of Internet materials related to Legal Blawgs. The Library of Congress described its mission to include "preserv[ation of] the Nation's cultural artifacts and provid[ing] enduring access to them. The Library's traditional functions, acquiring, cataloging, preserving and serving collection materials of historical importance to the Congress and the American people to foster education and scholarship, extend to digital materials, including websites.”

According to staff at the Library, the archive project is a way of capturing current events for historical and research purposes. The Law Library of Congress began harvesting legal blawgs in 2007 and the collection has grown into more than one hundred items covering a broad cross section of legal topics. Blawgs can be retrieved by keywords or browsed by subject, name or title.

The Pay to Play Law Blog in the Law Library of Congress will be available to the public here in Spring 2012.

Straight from a "Blawg You Aren't Reading Yet" to an "artifact". That's a full day.

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President Obama (Again) Looks to Impose a Form of Federal Pay-to-Play Disclosure on Federal Contractors

Last year, we reported here and here that certain elements of the Executive Branch have been looking into ways to impose federal pay-to-play restrictions and disclosure requirements on those doing business with the federal government. Today, the White House confirmed that President Obama is strongly contemplating issuing an executive order designed to impose pay-to-play disclosures on federal contractors in a big way.

As announced by the White House, the President is http://www.washingtonpost.com/politics/obama-weighs-disclosure-order-for-cont...">examining an order that would mandate that all federal contractors disclose any and all contributions to groups that engage in political activities. This is contemplated, the White House says, in direct response to the Supreme Court’s opinion in Citizens United v. FEC (discussed here) and Congress’ failure to enact the DISCLOSE Act (discussed here).

To learn more about what, exactly, the President has in mind, one needed to be on board Air Force One (headed to California on a Presidential and DNC fundraising swing, ironically enough) to hear White House Press Secretary Jay Carney say the following:

Q Jay, there was -- there were reports this morning that the administration is considering an executive order requiring companies seeking government contracts to disclose their contributions to groups that under current law would be secret. Is that correct?

MR. CARNEY: Well, what I can tell you is there is a draft -- there’s a process, and it’s in the -- it’s part of a process. There’s a draft, and the particular specifics of that executive order could change over time, so I can’t talk about the specifics. What I can tell you is the President is committed to improving our federal contracting system, making it more transparent and more accountable. He believes that American taxpayers deserve that, and that's what he intends to pursue through this executive order.

Q Is there any political goals behind this?

MR. CARNEY: Quite the contrary. He believes very strongly that taxpayers deserve to know whether or not the contractors that their money is going to is being used -- how they're spending their money, and how -- whether they're -- how they're spending in terms of political campaigns. And his goal is transparency and accountability. That's the responsible thing to do when you’re handling taxpayer dollars.

Q Is he likely to go ahead with the executive order? Or is there another way to accomplish it?

MR. CARNEY: I can’t -- there’s an executive order in the draft process. I can’t give you any specifics on it because the specifics could change. That's the nature of the process.

Q Jay, on a trip like this that combines presidential events with campaign events, can you talk about how it’s funded? For example, there are no presidential events in Los Angeles. Is that entire part of the trip funded through the campaign?

MR. CARNEY: Ari, you know the -- when there is travel like this that involves official travel and also political travel, this administration very diligently follows all the same rules that the Bush administration did. And as far as the specifics on how that breaks down, I’ll have to get back to you. I don't have that. But we’re very careful about making sure that all those rules are followed.

“Diligently [following] all the same rules that the Bush administration did” and breaking substantial new ground all at the same time. That’s a pretty impressive two-step.

One immediate challenge comes to mind: if all federal contractors and bidders are required to disclose their contributions to groups of any kind that engage in political or issue advocacy, how does one prevent federal contract officers from demonstrating bias against bidders supporting unpopular views or the party out of power? This is a decent enough effort at transparency that strikes me as having the potential to trod all over our constitutional rights to free expression and freedom of association. To quote David Wenhold, immediate past president of the American League of Lobbyists, “Sunlight is good, but sometimes too much sunshine can cause cancer.”

This is definitely one to stay tuned to.

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Paul Weiss, its New Player-Manager and BigGlobalLaw in 2009

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GLI SPONSORS MIKE HUCKABEE

Foundation Christian Academy (FCA) is hosting its 2nd Annual Benefit Dinner on Tuesday May 17th, 2011 at the Sloan Convention Center. GLI and Nancy Grimes are avid supporters of the community. Nancy Grimes has been a board member for Foundation Christian Academy for a number of years. Guest speaker for the event is former Arkansas [...]

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RESOURCE WELL INVESTMENT

We maintain a close relationship with prominent oil field operator in Texas o This oil field operator is offering fractional oil well ownership to our clients for a long term investment opportunity lasting 25yrs. ? This offer has 100% Success Rate with Proof of Performance ? 100% Transparent, Full Due Diligence package offered to Qualified [...]

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Employment Recruitment Agencies Are Now More Affordable Than Ever

There is no doubt that the economic meltdown is affecting all companies, whether they are billion dollar empires like AIG or smaller operations like community medical centers. One of the trends that are becoming more and more popular during this economic situation is that of employing employment recruitment agencies. Companies across industries are beginning to [...]

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Is It Really Too Late? Fraud, Statutes of Limitations & Recovering Investment Losses

Although it?s been three years since financial misconduct on Wall Street rocked the nation, investors still have opportunity to recoup some or all of their financial loss. If you suffered financial loss during the recent crisis, your broker, brokerage or financial advisor may be legally responsible for that loss. A variety of legal actions can [...]

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The GLI Advantage

by Nancy Grimes
GLI has achieved great success by following our state-of-the-art process time after time. The objective of any search assignment is always the same: to match a client?s specific need with the ideal candidate in a mutually beneficial manner for both parties. GLI considers it part of the assignment to overcome any obstacles which [...]

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Did Wall Street Bankers Commit CDO Fraud?

In 2009, the Securities and Exchange Commission (SEC) began a civil fraud investigation of over a dozen banking firms that traded and sold mortgage-backed collateralized debt obligations (CDOs). This investigation has engendered subsequent probes into the behavior of Wall Street firms. Did Wall Street bankers defraud investors by selling them CDOs in order to make [...]

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Will the SEC File Investment Fraud Charges Against Credit-Rating Companies?

Image via Wikipedia According to the Wall Street Journal, in May 2011 the Securities and Exchange Commission (SEC) acknowledged that credit-rating agencies, desirous of pleasing the companies they rate, are sometimes less than objective in their evaluations. To mitigate this problem, the SEC has proposed that credit-rating firms operate under stricter guidelines. This month, the [...]

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There is DEFINITELY a New Sheriff in Albany - Governor Cuomo Proposes Sweeping Ethics and Pay-to-Play Reform

Having apparently abandoned all hope of reforming New York’s Congressional delegation (and with a bipartisan ethics All-Star team including Congressmen Anthony Weiner (D-NY), Christopher Lee (R-NY), Eric Massa (D-NY), Charlie Rangel (D-NY) and Vito Fosella (R-NY)), Governor Cuomo has concluded that it's time to focus on New York State ethics and disclosure.

This week, Governor Cuomo announced that he, Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver had reached a three-way agreement on a substantial ethics reform package. Initially, and possibly more appropriately, named the “Clean Up Albany Act” in early press releases, the “Public Integrity Reform Act of 2011” proposes sweeping changes across a number of ethical disciplines. The proposed changes include the following:

Financial Disclosures: Financial disclosure statements filed with the new Joint Commission on Public Ethics from elected officials will now be posted on the internet and the prac tice of redacting the monetary values and amounts reported by the filer will be ended. The Act also includes greater and more precise disclosure of financial information by expanding the categories of value used by reporting individuals to disclose the dollar amounts in their financial disclosure statements. The Act requires disclosure of the reporting individual’s and his or her firm’s outside clients and customers doing business with, receiving grants or contracts from, seeking legislation or resolutions from, or involved in cases or proceedings before the State as well as such clients brought to the firm by the public official.

In Albany, this is a controversial measure as a number of legislators – who will now be required – effective July 1, 2012 and upon potential penalty of $40,000 for failing to do so – to disclose the names of “outside clients and customers” – are attorneys who do not wish to disclose the identities of their clients. As one would expect, backlash from legal members of the Assembly was immediate and vociferous.

Increased Access to Who is Appearing Before the State and Why: The Act establishes a new database of any individual or firm that appears in a representative capacity before any state governmental entity.

Additional Disclosures for Registered Lobbyists: The bill expands lobbying disclosure requirements, including the disclosure by lobbyists of any "reportable business relationships" of more than $1,000 with public officials. It also expands the definition of lobbying to include advocacy to affect the "introduction" of legislation or resolutions, a change that will help to ensure that all relevant lobbying activities are regulated by the new Joint Commission.

A New Joint Commission on Public Ethics: This is potentially the most significant development of the newly proposed legislation. The new Joint Commission on Public Ethics will replace the existing Commission on Public Integrity with jurisdiction over all elected state officials and their employees, both executive and legislative, as well as lobbyists. Among other restrictions, no individual will be eligible to serve on the Joint Commission who has within the last three years been a registered lobbyist, a statewide office holder, a legislator, a state commissioner or a political party chairman. Commissioners will be prohibited from making campaign contributions to candidates for elected executive or legislative offices during their tenure.

The Joint Commission will have jurisdiction to investigate potential violations of law by legislators and legislative employees and, if violations are found, issue findings to the Legislative Ethics Commission, which will have jurisdiction to impose penalties. Significantly, if the joint commission reports such a violation to the Legislative Ethics Commission (with full findings of fact and conclusions of law), that report must be made public along with the Legislative Ethics Commission’s disposition of the matter within strict timeframes. The Joint Commission will have jurisdiction to impose penalties on executive employees and lobbyists. Any potential violations of federal or state criminal laws will be referred to the appropriate prosecutor for further action.

This provision has proven controversial almost immediately. In order to initiate an investigation, the new Joint Commission will require that two appointees of the same party in a given branch assent. This means, as many have already pointed out, that in theory the commission could vote 11-3 to take action without anything being done. Similarly, the New York Times noted that “commissioners appointed by the Assembly speaker, Sheldon Silver, a Democrat, could effectively block investigations of any Democrat in the Legislature, while commissioners appointed by the Senate majority leader, Dean G. Skelos, a Republican, would have similar power over investigations of any Republican.”

Overall, however, it appears that most public interest groups believe that the newly proposed Joint Commission will strike the right balance between unbiased investigation and the prevention of politically motivated “witch hunts” against the party out of power.

Forfeiture of Pensions for Public Officials Convicted of a Felony: Certain public officials who commit crimes related to their public offices may have their pensions reduced or forfeited in a new civil forfeiture proceeding brought by the Attorney General or the prosecutor who handled the conviction of the official.

Clarifying Independent Expenditures For Elections: The Act requires the state board of elections to issue new regulations clarifying disclosure of Independent Expenditures.

Increased Penalties for Violations: The Act substantially increases penalties for violations of the filing requirements and contribution limits in the Election Law, and provides for a special enforcement proceeding in the Supreme Court. The bill also increases penalties for violations of certain provisions of the state’s code of Ethics that prohibits conflicts of interest.

Without a doubt, this legislation represents sweeping change that must be carefully studied, and compliance prepared for, by all doing business in New York.

Now, if only we could get the Governor to introduce a “Clean Up Washington Act”.

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Making Wonderful Printers For Sale

You would never want your point of sale system to be down because you ran out of paper. Receipt and remote printers are the parts of your point of sale system most prone to failure. They get the most use and have the most wear and tear of any part of your system. Of course [...]

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Loans against assets

        ASSETS = $   Just about anything of significant value can serve as collateral for a Loan. OUT OF GROUND ASSETS Precious Metals-Gold/Silver/Platinum, etc. Precious Stones, Gems, Rubies Emeralds, Diamonds, Sapphire. Rare Coins, Museum Quality Antiques & Art works. NOTE ON GEMS (We can not lend on any Gems that are [...]

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Search Firms Know the Best Recruiting Techniques

In World War II, there was a need for Assessment Centers to identify those people among fresh recruits who were capable of handling critical jobs and heavy responsibilities. In today?s scenario, similar recruiting techniques are used by search firms to identify the best candidates for their clients? requirements. Just as finding the right people to [...]

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Employment Recruitment Agencies Are Now More Affordable Than Ever

There is no doubt that the economic meltdown is affecting all companies, whether they are billion dollar empires like AIG or smaller operations like community medical centers. One of the trends that are becoming more and more popular during this economic situation is that of employing employment recruitment agencies. Companies across industries are beginning to [...]

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Principal Protected Notes, Lehman Brothers and UBS Financial Services Arbitrations

A recent class action suit against Lehman Brothers as well as an enforcement proceeding against UBS Financial Services by New Hampshire has encouraged investors to hire investment recovery litigators and pursue claims against firms selling Lehman Brothers principal protected notes in an attempt to recoup their financial losses. According to New Hampshire?s claim, UBS engaged [...]

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Lay of the Land 2011

As this blog has sought to highlight, pay-to-play laws at the state and municipal levels are in a constant state of transition as political forces seek to respond to public sentiment surrounding the uneasy connections between money, politics and government contracting. If anything, the national patchwork of pay-to-play regulation has become less coherent or uniform over the past several years. This is a trend which does not look to abate in 2011 and which places a premium on corporate compliance personnel who understand the various trends in the law.

Absent dedicated in-house personnel, it is virtually impossible for entities that sell their goods and services on a national scale to remain attuned to the constant evolution of these laws at the local level. It is also virtually impossible for entities found to have violated a local law to engender much sympathy from those charged with its enforcement by pointing out regulatory inconsistencies across the national spectrum or the relevant insignificance of the regulator’s jurisdiction to overall sales. Trust me, we’ve seen folks try it and it doesn’t go over well.

With this in mind, we thought it might be helpful to categorize a few representative jurisdictions to highlight some recent trends. This listing is not comprehensive but rather is designed to be illustrative. Moreover, these laws are always in a state of flux so be sure to check your local jurisdiction for recent updates before relying on what you read on the internet:

Jurisdictions that Impose Significant Restrictions on Contracting with a Potential Penalty of Debarment. The most aggressive jurisdictions ban entities from engaging in government contracting when they, or their agents (however defined), have made political contributions. Those doing business in such jurisdictions need to be especially watchful of their compliance systems and internal data gathering. The stakes are simply too high. With more and more jurisdictions employing online contribution databases, one can easily see how such laws will present a new realm of a “gotcha” bid protest for disgruntled losing bidders. We haven’t seen much of this tactic yet, but one can easily see how step one after being notified that one has lost a competitive bid will be to go online and see if the winner’s board, executives, spouses, family members or domestic partners have inadvertently made a contribution to a relevant government procurement o fficer’s campaign.

Examples of laws falling in this category include: California, Hawaii, Ohio, New Jersey, Virginia and West Virginia.

Jurisdictions that Mandate Disclosure of Pay-to-Play Contributions. Many jurisdictions do not prohibit entities from procuring government contracts if they, or their agents, have made political contributions. These jurisdictions simply require disclosure of those contributions with the relevant government agency. While such laws certainly lessen the stakes (and cases of “night sweats” so common with in-house compliance personnel), they do not obviate the often unpleasant task of reaching out to your Chairman’s spouse every quarter to inquire about contributions the spouse might have made.

Examples of laws falling in this category include: Connecticut, Illinois, New Mexico, Pennsylvania, and Rhode Island.

Jurisdictions that have limited Pay-to-Play Restrictions to Specific Municipal or Contracting Subsets. Examples of such jurisdictions include Indiana, in which contractors with the State Lottery Commission, and the contractor’s directors, officers and political action committees, are prohibited from making contributions to candidates for state, state legislative or local office, and to a candidate’s committee, a regular party committee or a state legislative caucus committee, while the contract is in effect and during the three years following expiration or termination of the contract.

Likewise, in Louisiana, persons entering into contracts, subcontracts or transactions to provide goods or services related to hurricane rebuilding efforts, which are not publicly or competitively bid, are prohibited from making a contribution to an elected official if such contract or transaction is under the jurisdiction or supervision of the elected official’s agency. In New York, while no expansive regulations have been enacted to date, the State Comptroller has issued an Executive Order which sets forth robust “pay-to-play” regulations relating to entities who do business, or seek to do business, with the New York State Common Retirement Fund.

Jurisdictions that are Designing, but have not yet Implemented, Pay-to-Play Laws. Candidly, this category captures just about every other jurisdiction. It is simply too easy for a legislator, county commissioner, city council or school board to adopt such laws - or talk about adopting such laws - when one of their own has been caught with her hands in the cookie jar.

Examples of laws falling in this category include: Colorado, Georgia, Michigan, North Carolina, Texas and Wisconsin.

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Milberg, Dreier, and the Shanda of It All

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Milberg, Dreier, and the Shanda of It All

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Did Goldman Sachs Play an Unwholesome Role in the Recent Financial Crisis?

According to an article published by Reuters on June 2, 2011, Goldman Sachs has been subpoenaed by the Manhattan District Attorney?s Office for information regarding its role in events which precipitated the recent worldwide financial crisis. Earlier this year, the Wall Street Journal reported that the U.S. Department of Justice also plans to subpoena Goldman [...]

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GLI SPONSORS MIKE HUCKABEE

Foundation Christian Academy (FCA) is hosting its 2nd Annual Benefit Dinner on Tuesday May 17th, 2011 at the Sloan Convention Center. GLI and Nancy Grimes are avid supporters of the community. Nancy Grimes has been a board member for Foundation Christian Academy for a number of years. Guest speaker for the event is former Arkansas [...]

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Is It Really Too Late? Fraud, Statutes of Limitations & Recovering Investment Losses

Although it?s been three years since financial misconduct on Wall Street rocked the nation, investors still have opportunity to recoup some or all of their financial loss. If you suffered financial loss during the recent crisis, your broker, brokerage or financial advisor may be legally responsible for that loss. A variety of legal actions can [...]

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President Obama (Again) Looks to Impose a Form of Federal Pay-to-Play Disclosure on Federal Contractors

Last year, we reported here and here that certain elements of the Executive Branch have been looking into ways to impose federal pay-to-play restrictions and disclosure requirements on those doing business with the federal government. Today, the White House confirmed that President Obama is strongly contemplating issuing an executive order designed to impose pay-to-play disclosures on federal contractors in a big way.

As announced by the White House, the President is http://www.washingtonpost.com/politics/obama-weighs-disclosure-order-for-cont...">examining an order that would mandate that all federal contractors disclose any and all contributions to groups that engage in political activities. This is contemplated, the White House says, in direct response to the Supreme Court’s opinion in Citizens United v. FEC (discussed here) and Congress’ failure to enact the DISCLOSE Act (discussed here).

To learn more about what, exactly, the President has in mind, one needed to be on board Air Force One (headed to California on a Presidential and DNC fundraising swing, ironically enough) to hear White House Press Secretary Jay Carney say the following:

Q Jay, there was -- there were reports this morning that the administration is considering an executive order requiring companies seeking government contracts to disclose their contributions to groups that under current law would be secret. Is that correct?

MR. CARNEY: Well, what I can tell you is there is a draft -- there’s a process, and it’s in the -- it’s part of a process. There’s a draft, and the particular specifics of that executive order could change over time, so I can’t talk about the specifics. What I can tell you is the President is committed to improving our federal contracting system, making it more transparent and more accountable. He believes that American taxpayers deserve that, and that's what he intends to pursue through this executive order.

Q Is there any political goals behind this?

MR. CARNEY: Quite the contrary. He believes very strongly that taxpayers deserve to know whether or not the contractors that their money is going to is being used -- how they're spending their money, and how -- whether they're -- how they're spending in terms of political campaigns. And his goal is transparency and accountability. That's the responsible thing to do when you’re handling taxpayer dollars.

Q Is he likely to go ahead with the executive order? Or is there another way to accomplish it?

MR. CARNEY: I can’t -- there’s an executive order in the draft process. I can’t give you any specifics on it because the specifics could change. That's the nature of the process.

Q Jay, on a trip like this that combines presidential events with campaign events, can you talk about how it’s funded? For example, there are no presidential events in Los Angeles. Is that entire part of the trip funded through the campaign?

MR. CARNEY: Ari, you know the -- when there is travel like this that involves official travel and also political travel, this administration very diligently follows all the same rules that the Bush administration did. And as far as the specifics on how that breaks down, I’ll have to get back to you. I don't have that. But we’re very careful about making sure that all those rules are followed.

“Diligently [following] all the same rules that the Bush administration did” and breaking substantial new ground all at the same time. That’s a pretty impressive two-step.

One immediate challenge comes to mind: if all federal contractors and bidders are required to disclose their contributions to groups of any kind that engage in political or issue advocacy, how does one prevent federal contract officers from demonstrating bias against bidders supporting unpopular views or the party out of power? This is a decent enough effort at transparency that strikes me as having the potential to trod all over our constitutional rights to free expression and freedom of association. To quote David Wenhold, immediate past president of the American League of Lobbyists, “Sunlight is good, but sometimes too much sunshine can cause cancer.”

This is definitely one to stay tuned to.

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Prince George's County, Maryland Adopts a Different Approach to Pay-to-Play

As we’ve observed here a few times before, nothing gets a legislator in the mood for regulatory action like press accounts of one of their own getting busted for pocketing a few dollars in exchange for government largess. One could hardly second guess Prince George’s County, Maryland for following this predictable pattern. In this case however, the funds forming the catalyst for action weren’t “pocketed” - they were “bra’d”.

Last November, the Washington, DC area was somewhat titillated by news reports that Prince George’s County Executive Jack B. Johnson and his wife, Prince George’s County Councilwoman-Elect Leslie Johnson had been arrested by the FBI in connection with an investigation into allegations that certain real estate developers in Prince George’s County, Maryland were bribing public officials in exchange for official acts benefitting the developers and their companies. The FBI moved in, it was reported, when their wiretaps overheard Johnson instruct his wife to flush a developer’s check for $100,000 down the toilet and to conceal another $79,600 in cash in her bra.

Regardless of where the money went, the result was inevitable - pay-to-play legislation.

In an interesting symbiotic pairing, corrective legislation is moving through the Maryland General Assembly at precisely the same pace as Prince George’s County Council member Leslie Johnson moves through the Maryland criminal justice system. On March 25, 2011, the very day the Justice Department filed new criminal charges against Johnson for conspiracy to commit witness and evidence tampering, Maryland’s House of Delegates passed House Bill 614 in response to the Johnson episode.

What makes the Maryland legislation unique is the approach taken to remedy the harm inflicted on public confidence in local government. The easy approach would have been to enact feel-good prohibitions against developer interactions with county executives. Such legislation is easy to pass but is exceedingly difficult for well-meaning citizens to comply with and often does little to prevent the truly nefarious bad actors who simply “find another way”. As the team at CityEthics.org correctly observed, the problem in Prince George’s County was not as much with the private sector but rather an inadequate ethics program and unique powers to hold up development unless a payoff is made:

But there can be no pay-to-play without special powers. Developers only pay when they have to. And there can be no special powers without a very poor ethics environment. It's a vicious circle, and it appears that Prince George's County is caught up in it.

House Bill 614 goes a long way towards addressing these issues, and does so by placing limitations where they belong, on the county executives who are perceived to have abused their far-reaching powers for personal gain. According to the Washington Post the County has long housed “complaints that past councils have operated secretively, threatening developers that their plans would be held up indefinitely unless they offered concessions or hired an associate of a council member.” If signed into law, the current legislation will severely curtail the County Council’s ability to shelve development deals and enhance the County’s ethics commission by installing a full time executive director and require regular meetings.

This strikes us a sensible approach, targeted to address a clearly identified problem, that does not place undue hardships on the honest 99% in the private sector who have succeeded in keeping their knickers clean.

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MSRB Takes on Pay-to-Play Again - This Time in the Muni Advisory World

The Municipal Securities Rulemaking Board (“MSRB”) is at it again. MSRB is wasting no time putting rules in place to address pay-to-play practices for the advisory community. MSRB called a special meeting to address this issue, among others, on the heels of the 2010 Dodd-Frank Act, which expanded MSRB’s jurisdiction to include the regulation of municipal advisors, in addition to dealers, which MSRB has regulated since 1975. The MSRB Board of Directors agreed to issue a request for comment on a rule that would restrict municipal advisors from engaging in or soliciting business from municipal entities when an advisor has made certain political contributions to a municipal officer responsible for awarding that business. The rule would mirror the one currently in place for dealers. MSRB officials have said the rule would not be retroactive.

“We are wasting no time in seeking to implement a rule to address ‘pay-to-play’ practices in the municipal market,” said MSRB Chair Michael Bartolotta. “The MSRB already stringently regulates this area of the municipal market with rules restricting pay-to-play by municipal securities dealers, and putting similar rules in place for the advisory community is one of our top priorities.”

The Board also discussed its continued efforts to provide guidance on contributions by political action committees of companies affiliated with dealers. MSRB’s interpretive guidance takes effect on December 12, 2010. In light of such guidance, MSRB has decided not to take further action on an earlier proposal to require dealers to name PACs of their affiliated companies. Stay tuned for updates in this area.

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Prince George's County, Maryland Adopts a Different Approach to Pay-to-Play

As we’ve observed here a few times before, nothing gets a legislator in the mood for regulatory action like press accounts of one of their own getting busted for pocketing a few dollars in exchange for government largess. One could hardly second guess Prince George’s County, Maryland for following this predictable pattern. In this case however, the funds forming the catalyst for action weren’t “pocketed” - they were “bra’d”.

Last November, the Washington, DC area was somewhat titillated by news reports that Prince George’s County Executive Jack B. Johnson and his wife, Prince George’s County Councilwoman-Elect Leslie Johnson had been arrested by the FBI in connection with an investigation into allegations that certain real estate developers in Prince George’s County, Maryland were bribing public officials in exchange for official acts benefitting the developers and their companies. The FBI moved in, it was reported, when their wiretaps overheard Johnson instruct his wife to flush a developer’s check for $100,000 down the toilet and to conceal another $79,600 in cash in her bra.

Regardless of where the money went, the result was inevitable - pay-to-play legislation.

In an interesting symbiotic pairing, corrective legislation is moving through the Maryland General Assembly at precisely the same pace as Prince George’s County Council member Leslie Johnson moves through the Maryland criminal justice system. On March 25, 2011, the very day the Justice Department filed new criminal charges against Johnson for conspiracy to commit witness and evidence tampering, Maryland’s House of Delegates passed House Bill 614 in response to the Johnson episode.

What makes the Maryland legislation unique is the approach taken to remedy the harm inflicted on public confidence in local government. The easy approach would have been to enact feel-good prohibitions against developer interactions with county executives. Such legislation is easy to pass but is exceedingly difficult for well-meaning citizens to comply with and often does little to prevent the truly nefarious bad actors who simply “find another way”. As the team at CityEthics.org correctly observed, the problem in Prince George’s County was not as much with the private sector but rather an inadequate ethics program and unique powers to hold up development unless a payoff is made:

But there can be no pay-to-play without special powers. Developers only pay when they have to. And there can be no special powers without a very poor ethics environment. It's a vicious circle, and it appears that Prince George's County is caught up in it.

House Bill 614 goes a long way towards addressing these issues, and does so by placing limitations where they belong, on the county executives who are perceived to have abused their far-reaching powers for personal gain. According to the Washington Post the County has long housed “complaints that past councils have operated secretively, threatening developers that their plans would be held up indefinitely unless they offered concessions or hired an associate of a council member.” If signed into law, the current legislation will severely curtail the County Council’s ability to shelve development deals and enhance the County’s ethics commission by installing a full time executive director and require regular meetings.

This strikes us a sensible approach, targeted to address a clearly identified problem, that does not place undue hardships on the honest 99% in the private sector who have succeeded in keeping their knickers clean.

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Paul Weiss, its New Player-Manager and BigGlobalLaw in 2009

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Insurance Recruiters: Helping Your Company Hire Insurance Professionals

Unlike many other industries, the insurance industry is one industry that requires large numbers of highly skilled as well as qualified and certified people. In the current market scenario, this is translating into huge recruitment problems. There are many reasons for this. Some of the recruiting problems are discussed below and so are the solutions.
Types [...]

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Second Quarter 2010 Report

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A Thoughtful Response to a Past Blog Exchange: Is the "Stick" of Regulation Preferable to a Disclosure Scheme?

 This week, CityEthics.org analyzed a past exchange that occurred between Common Cause Georgia and the Pay to Play Law Blog that centered on our competing views as to the most effective means of ensuring public confidence in a workable scheme to prevent pay-to-play practices.

Their post is a thoughtful and lengthy analysis of the strengths and weaknesses of the “disclosure only” vs. “government regulation and debarment” schemes emerging throughout the country. Founded as they are by former prosecutors and ethics commission officials whose self-statedmission is to foster such laws as the means “to combat corruption and establish ethical local governments”, it is not surprising that CityEthics.org has reached the conclusion that “[d]isclosure is not an effective solution.”

Notwithstanding the difference in perspectives between the authors of the CityEthics.org site and the contributors to this blog, who view pay-to-play enforcement issues from the perspective of those required to establish compliance programs to comply with such laws and their oft-unintended consequences, the City Ethics post provides a solid recitation of the issue from the perspective of the regulating community and I recommend that you read it. Personal ego impels me, however, to respond to a few of the post’s assertions about the viability of a strict “government prohibition” solution as well as to defend the motivations of those who believe, as we do, that a scheme based on disclosure often accomplishes the same worthwhile goals without the burden of occasional draconian unintended consequences.

The differences in perspectives tend, in large part, toward the tension between what we aspire to achieve and what can realistically be drafte d, enforced, and complied with in a real world where enforcement and corporate compliance resources are limited, free speech is respected, and basic human interactions occur between those somehow associated with vendors and those on a public payroll.

The universal and noble goal of pay-to-play laws everywhere is to prevent corruption that can occur at the intersection of private sector benefits (in the form of gifts and contributions) on the one hand, and the award of government contracts on the other, in an environment in which existing laws to prevent such corruption are deemed unworkable because of the difficulty in proving the quid pro quo connection between the two required to make a criminal case. Jurisdictions adopting pay-to-play laws do so upon reaching the conclusion that such laws are necessary to prevent any potential or perceived linkage that can not be proven but that we all know exists to some degree.

Some such solutions, such as those offered by CityEthics.org, overreach to ban even the most fundamental freedoms of speech and association as a means of ensuring that such linkage not occur (“many jurisdictions require contractors to disclose what they do, and yet contractors keep giving large contributions anyway” and “[t]he same people who oppose restrictions on contractors making campaign contributions also oppose giving money to publicly funded candidates running against wealthy candidates”). Even if we were to conclude that such solutions were the most effective and narrowly tailored available to the problem of unprovable quid pro quo corruption, such laws can become impossible to enforce in the real world. As many jurisdictions have already learned, once one embarks down the path of prohibiting contributions by corporations and their “agents”, one has placed one’s hind-quarters squarely on the proverbial slippery slope. To prevent circumvention of a law by those few bad actors determined to gain an advantage, one must legislate prohibitions against otherwise lawful conduct by a vast array of potential agents (directors, directors’ spouses, relatives, domestic partners, etc). As states such as Colorado have learned, to cast a net wide enough to prevent circumvention one often does so at the expense of the constitutional rights of innocent parties and always at the expense of lawful businesses who simply want to follow the law.

My personal belief is that it is not realistic to conclude, as CityEthics.org does, that corporations “already have excellent compliance programs to deal with these matters” or that those smaller companies which do not “would, in this sense, be at a disadvantage but, luckily, they have many fewer individuals to keep track of.” If this premise is wrong, and our experience working with the private sector tells me it is, a less draconian impediment to legal, but arguably unseemly conduct, than loss of one’s ability to do business with government, is likely appropriate.

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Have you used Mark E. Imbertson as Your Broker?

Mark E. Imbertson, a former Merrill Lynch stock broker in West Palm Beach, Florida, was recently terminated for alleged multiple customer complaints. Mark Imbertson has received 17 reported customer disputes on his employment record, according to FINRA broker check. Many of the complaints allegedly relate to unauthorized trading and short selling without customer approval. If you were a [...]

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Third Quarter 2010 Report

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Best Wishes for an Ethical 2009

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Second Quarter 2010 Report

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FINRA CEO Says Brokers Must ?Push and Pull? for Private Placement Information

Often, investment advisors, stockbrokers and brokerages who unsuitably push Reg. D Private Placements on investors claim that any financial losses investors subsequently experience occur despite their due diligence. However, these private investments pay high fees that can induce some financial professionals to look the other way, focusing on the fifteen percent fee rather than the [...]

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President Obama (Again) Looks to Impose a Form of Federal Pay-to-Play Disclosure on Federal Contractors

Last year, we reported here and here that certain elements of the Executive Branch have been looking into ways to impose federal pay-to-play restrictions and disclosure requirements on those doing business with the federal government. Today, the White House confirmed that President Obama is strongly contemplating issuing an executive order designed to impose pay-to-play disclosures on federal contractors in a big way.

As announced by the White House, the President is http://www.washingtonpost.com/politics/obama-weighs-disclosure-order-for-cont...">examining an order that would mandate that all federal contractors disclose any and all contributions to groups that engage in political activities. This is contemplated, the White House says, in direct response to the Supreme Court’s opinion in Citizens United v. FEC (discussed here) and Congress’ failure to enact the DISCLOSE Act (discussed here).

To learn more about what, exactly, the President has in mind, one needed to be on board Air Force One (headed to California on a Presidential and DNC fundraising swing, ironically enough) to hear White House Press Secretary Jay Carney say the following:

Q Jay, there was -- there were reports this morning that the administration is considering an executive order requiring companies seeking government contracts to disclose their contributions to groups that under current law would be secret. Is that correct?

MR. CARNEY: Well, what I can tell you is there is a draft -- there’s a process, and it’s in the -- it’s part of a process. There’s a draft, and the particular specifics of that executive order could change over time, so I can’t talk about the specifics. What I can tell you is the President is committed to improving our federal contracting system, making it more transparent and more accountable. He believes that American taxpayers deserve that, and that's what he intends to pursue through this executive order.

Q Is there any political goals behind this?

MR. CARNEY: Quite the contrary. He believes very strongly that taxpayers deserve to know whether or not the contractors that their money is going to is being used -- how they're spending their money, and how -- whether they're -- how they're spending in terms of political campaigns. And his goal is transparency and accountability. That's the responsible thing to do when you’re handling taxpayer dollars.

Q Is he likely to go ahead with the executive order? Or is there another way to accomplish it?

MR. CARNEY: I can’t -- there’s an executive order in the draft process. I can’t give you any specifics on it because the specifics could change. That's the nature of the process.

Q Jay, on a trip like this that combines presidential events with campaign events, can you talk about how it’s funded? For example, there are no presidential events in Los Angeles. Is that entire part of the trip funded through the campaign?

MR. CARNEY: Ari, you know the -- when there is travel like this that involves official travel and also political travel, this administration very diligently follows all the same rules that the Bush administration did. And as far as the specifics on how that breaks down, I’ll have to get back to you. I don't have that. But we’re very careful about making sure that all those rules are followed.

“Diligently [following] all the same rules that the Bush administration did” and breaking substantial new ground all at the same time. That’s a pretty impressive two-step.

One immediate challenge comes to mind: if all federal contractors and bidders are required to disclose their contributions to groups of any kind that engage in political or issue advocacy, how does one prevent federal contract officers from demonstrating bias against bidders supporting unpopular views or the party out of power? This is a decent enough effort at transparency that strikes me as having the potential to trod all over our constitutional rights to free expression and freedom of association. To quote David Wenhold, immediate past president of the American League of Lobbyists, “Sunlight is good, but sometimes too much sunshine can cause cancer.”

This is definitely one to stay tuned to.

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GLI SPOTLIGHTS GEORGE MITCHELL

George joined GLI in 2006 after a lengthy career in the human resources department of a Fortune 500 company.
George very much enjoys his role as Project Coordinator for the Philadelphia market. Originally from the area, George knows the market well and believes the best way to service his candidates and clients is to LISTEN ? [...]

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Is It Really Too Late? Fraud, Statutes of Limitations & Recovering Investment Losses

Although it?s been three years since financial misconduct on Wall Street rocked the nation, investors still have opportunity to recoup some or all of their financial loss. If you suffered financial loss during the recent crisis, your broker, brokerage or financial advisor may be legally responsible for that loss. A variety of legal actions can [...]

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Prince George's County, Maryland Adopts a Different Approach to Pay-to-Play

As we’ve observed here a few times before, nothing gets a legislator in the mood for regulatory action like press accounts of one of their own getting busted for pocketing a few dollars in exchange for government largess. One could hardly second guess Prince George’s County, Maryland for following this predictable pattern. In this case however, the funds forming the catalyst for action weren’t “pocketed” - they were “bra’d”.

Last November, the Washington, DC area was somewhat titillated by news reports that Prince George’s County Executive Jack B. Johnson and his wife, Prince George’s County Councilwoman-Elect Leslie Johnson had been arrested by the FBI in connection with an investigation into allegations that certain real estate developers in Prince George’s County, Maryland were bribing public officials in exchange for official acts benefitting the developers and their companies. The FBI moved in, it was reported, when their wiretaps overheard Johnson instruct his wife to flush a developer’s check for $100,000 down the toilet and to conceal another $79,600 in cash in her bra.

Regardless of where the money went, the result was inevitable - pay-to-play legislation.

In an interesting symbiotic pairing, corrective legislation is moving through the Maryland General Assembly at precisely the same pace as Prince George’s County Council member Leslie Johnson moves through the Maryland criminal justice system. On March 25, 2011, the very day the Justice Department filed new criminal charges against Johnson for conspiracy to commit witness and evidence tampering, Maryland’s House of Delegates passed House Bill 614 in response to the Johnson episode.

What makes the Maryland legislation unique is the approach taken to remedy the harm inflicted on public confidence in local government. The easy approach would have been to enact feel-good prohibitions against developer interactions with county executives. Such legislation is easy to pass but is exceedingly difficult for well-meaning citizens to comply with and often does little to prevent the truly nefarious bad actors who simply “find another way”. As the team at CityEthics.org correctly observed, the problem in Prince George’s County was not as much with the private sector but rather an inadequate ethics program and unique powers to hold up development unless a payoff is made:

But there can be no pay-to-play without special powers. Developers only pay when they have to. And there can be no special powers without a very poor ethics environment. It's a vicious circle, and it appears that Prince George's County is caught up in it.

House Bill 614 goes a long way towards addressing these issues, and does so by placing limitations where they belong, on the county executives who are perceived to have abused their far-reaching powers for personal gain. According to the Washington Post the County has long housed “complaints that past councils have operated secretively, threatening developers that their plans would be held up indefinitely unless they offered concessions or hired an associate of a council member.” If signed into law, the current legislation will severely curtail the County Council’s ability to shelve development deals and enhance the County’s ethics commission by installing a full time executive director and require regular meetings.

This strikes us a sensible approach, targeted to address a clearly identified problem, that does not place undue hardships on the honest 99% in the private sector who have succeeded in keeping their knickers clean.

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Sales Recruiters: What Type of Positions Do They Fill?

In an economic crisis like the one we are facing today, sales jobs have become more important than ever. Companies may cut down on advertising and reduce expenditure on the marketing and promotion of their products, but they all need a strong sales force to keep them in business. Without a dependable sales force, companies [...]

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Costs Associated with Investing in Mutual Funds

If you?ve invested in mutual funds, you should know that taxes can affect your investment, sometimes significantly reducing your net returns. To completely avoid federal taxes, consider investments such as tax free municipal bonds. Also be aware that some mutual fund investments are more tax efficient than others. Below is some basic information regarding mutual [...]

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Legal Recruiters: How Legal Headhunters Help Find the Best Talent

The legal system is at the foundation of our nation and if affects companies just as it affects society at large. Every company needs the expert advice and services from members of the legal profession from time to time. The need to hire the best and most competent lawyers has increased over a period of [...]

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Voting While Subject to a Conflict of Interest is not "Free Speech"

A unanimous United States Supreme Court today confirmed what anyone not sitting on the Nevada Supreme Court would be presumed already to know: legislators do not have a free speech right to vote on a matter they would otherwise be prohibited from recording under a state’s code of ethics. While this ruling would not appear, on the surface, to be controversial, a careful read of the opinion reveals that the legislator in question, as well as the Nevada Supreme Court, missed an opportunity to challenge the extended scope of the code in a way that would have had direct relevance to the regulated pay-to-play community.

In this case, Nevada Commission on Ethics v. Carrigan, Sparks, Nevada City Councilmember Michael Carrigan voted to approve a hotel/casino deal that would have directly benefitted his long-time friend and campaign manager. Even in Nevada, that was considered a disqualifying conflict of interest under state law. Nonetheless, Carrigan took a shot at Frontier Justice and tried to argue that any law impairing his right to vote amounted to a denial of his constitutionally guaranteed right to free speech. The Nevada Supreme Court went along and dismissed the charges against Carrigan.

Because the Nevada court had ruled in such a broad fashion – virtually guaranteeing legislators the constitutional right to vote on a matter notwithstanding any state-imposed restrictions – it was relatively easy for outside observers to characterize the case as a “decision, [that] if upheld, threatened ethics laws nationwide”. The issue, thus framed, became relatively easy even for the chronically fractured Supreme Court.

Where opportunity for clarity was lost, unfortunately, was with respect to the permissible scope of ethics and pay-to-play laws in seeking to regulate behavior based on the conduct of others. One of the hallmarks of modern pay-to-play legislation is the need to prevent “circumvention” by casting ever-widening nets of relationships for which the regulated community is responsible for. This blog has bemoaned the compliance challenges posed by unreasonably broad compliance circles (such as http://www.paytoplaylawblog.com/2010/08/articles/alaska/alaska-gets-in-on-the...">here and here) and the issue has been taken up by the United States Second Court of Appeals.

In the present case, Nevada’s law prohibited legislators from voting on matters which might be impaired by the legislator’s “commitment” to members of his/her family, blood relatives, those related by adoption or marriage, employees, members of the household, and those with “substantial and continuing” business relationships with the officer. As if that weren’t vague enough, Carrigan actually got zapped on an even broader, and more vague, clause 281A.420(8)(e) capturing commitments or relationships “substantially similar” to those defined above. Such vague legislating would appear to be ripe for constitutional challenge. Unfortunately, as the U.S. Supreme Court gleefully pointed out in the last section of its opinion, Carrigan neglected to raise the issue in his petition for certiorari and the Court saw “no reason to sidestep” the rule that omitted arguments are considered waived.

It would thus appear that an opportunity to provide guidance, and pre-empt my whining about overbroad pay-to-play statutes, has been lost.

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