Six Lambda Marketing Deck
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This document summarizes various regulations that financial firms and contractors must follow regarding political contributions: - The SEC, FINRA, MSRB, and CFTC all have rules that limit or prohibit political contributions from regulated entities to officials who control government funds to prevent pay-to-play practices. - Firms must have compliance programs to monitor employees' contributions and prevent violations, but manually searching donation records can be time-consuming. - Six Lambda's tools automatically scrape contribution data daily from 50+ sources to identify any new donations from an employee that would violate rules, alerting firms within 24 hours. - They currently serve large asset managers, private equity firms, and politically active companies to help safeguard them
Six Lambda Marketing Deck
- 1. Cover your (political) bases.
- 2. Financial Firms and Contractors regulated by multiple entities ● Securities Exchange Commission Rule 206(4)-5, which limits, and in many cases, prohibits political contributions by investment advisors to elected officials or candidates who have direct or indirect control over governmental pension funds; ● Financial Industry Regulatory Authority Rule 2030, which generally follows the SEC's Rule 206(4)-5; ● Contractors to Municipal, State, and Federal Governments must follow a dizzying array of pay-to-play regulations. ● MSRB: Municipal Securities Rulemaking Board Rule G-37, which prohibits brokers, dealers, and municipal security dealers from engaging in the municipal securities business if they have made disqualifying political contributions to covered municipal officials; and ● Commodity Futures Trading Commission Regulation 23.451, which prohibits swap dealers from offering or entering into a swap with a governmental Special Entity if a disqualifying political contribution was made within a two-year lookback
- 3. How are you safe guarding your firm? ● Typically, companies offer pre-clearance forms on their employee’s automated compliance software ● When employees neglect to fill out this pre-clear or disclose, contributions can result in costly issues for the entire firm ● Manually searching for political contributions can take weeks of monotonous work for compliance professionals ● Most all compliance programs are missing a thorough verification layer That’s why we formed Six Lambda.
- 4. Solution: Six Lambda Monitoring Tools ● We protect you and your employees, by scraping contribution data at the federal, state, and local level. ● Even if your employee does not pre-clear a campaign donation you will know about it through our rigorous search capabilities
- 5. We manually collect all political giving at the Federal, State & Local level daily and alert you if we see a new transaction from one of your employees within 24 hours of posting. This data comes from over 50 sources, and we standardize it into a central database to easily query daily for your firm. How it works:
- 6. We currently serves clients . . . . . . managing over $180 billion in assets under management. . . . in Private Equity, Hedge Fund, and Mutual Fund companies. . . . companies with very politically active principals.
- 7. 9 Recent Enforcement Actions Over the past several years, the SEC has stepped up their enforcement actions regarding campaign finance rule violations. Adams Capital Management $45,000 Aisling Capital $70,456 Alta Communications $35,000 Commonwealth Venture Management $75,000 Cypress Advisors $35,000 FFL Partners $75,000 Limerock Management $75,000 NGN Capital $100,000 The Banc Fund Company $75,000
- 8. Case Study #1 - Pershing Square Management ● A former analyst made a single $500 contribution to a candidate for Governor of Massachusetts in excess of the $150 limit ● The analyst failed to pre-clear the contribution and as a result it was made without the apparent knowledge of the firm’s chief compliance officer ● The analyst made the contribution for personal reasons (family friend request) more than 2 years after the initial investment was made with the firm ● The analyst never spoke with the state’s investment representatives ● The analyst was not an executive or an equivalent and given his job description may not have been considered a “covered associate” ● FINE: $75,000
- 9. Case study #2: TL Ventures ● 1999 - TL Ventures raised money for a fund including a $35 million commitment from the PA State Employees’ Retirement System (SERS) ● 2000 - TL raised money for another fund including a commitment from both SERS and the City of PA Board of Pensions and Retirement of $50 million ● Both funds included a five-year investment period and a 10-year total life cycle ● 2011 - Firm co founder Bob Keither made political donations to a Philadelphia Mayor and PA Governor Tom Corbett ● These investments seem to be legal, but the SEC determined that each of these funds also had the possibility of requesting a pair of one-year extensions following the 10 year life cycle. ● These extensions meant the pensions would be charged for additional fee expenses ● Even if no fund extension had been required the co-founder was prohibited from making a contribution until all regular fee payments had ceased ● TL Ventures settled on fine of $300,000
- 10. Contact us: Nicole Lundergan (610) 632-6606 VP - Sales and Marketing nicole@sixlambda.com