Tag: kamala harris

Selection of Gov. Walz as VP Candidate Implicates SEC Pay-To-Play Rule

Kamala Harris’ selection of Tim Walz as running mate for her presidential campaign has implications under the Securities and Exchange Commission’s (SEC) Rule 206(4)-5 under the Investment Advisers Act (SEC Pay-to-Play Rule). In particular, certain political contributions to vice presidential candidate Tim Walz, who serves as Chair of the Minnesota State Board of Investment (SBI), and other actions by investment advisers and certain of their personnel could trigger a two-year “time-out” that would prevent an investment adviser from collecting fees from any of the statewide retirement systems or other investment programs or state cash accounts managed by the SBI. As a result, all investment advisers should consider reviewing their existing policies and procedures relating to pay-to-play and political contributions, and they should remind employees of these policies in connection with the 2024 election cycle.

A few key takeaways in this regard

  • The SEC Pay-to-Play Rule prohibits investment advisers, including exempt advisers and exempt reporting advisers,1 from receiving compensation for providing advisory services to a government entity client for two years after the investment adviser or certain personnel, including executive officers and employees soliciting government entities,2 has made a contribution to an “official”3 of the government entity.
    • Governor Walz is an “official” of the SBI under the SEC Pay-to-Play Rule because he serves on the board of the SBI.
    • An investment adviser was recently fined by the SEC for violations of the SEC Pay-to-Play Rule following a contribution by a covered associate to a candidate who served as a member of the SBI.4
  • As a result of Governor Walz’s role with regard to the SBI, any contributions by a covered adviser (or any PAC controlled by the adviser) or any contributions by its covered associates above the de minimis amount of US$3505 to the Harris/Walz campaign will trigger a two-year “time-out.” This may have implications for investment advisers that are not currently seeking to do business with the SBI but may in the future, as the “time out” period applies for the entirety of the two-year period, even if Governor Walz ceases to be an “official” of the SBI after the election.
  • Contributions by family members of covered associates and contributions to super PACs or multicandidate PACs (so long as contributions are not earmarked for the benefit of the Harris/Walz campaign) generally are not restricted under the SEC Pay-to-Play Rule, if not done in a manner designed to circumvent the rule.
  • In addition to the SEC Pay-to-Play Rule, financial services firms should be mindful of other restrictions under Municipal Securities Rule Making Board Rule G-37, Commodity Futures Trading Commission Regulation 23.451, Financial Industry Regulatory Authority Rule 2030, and SEC Rule 15Fh-6.
  • Similar concerns were implicated when then-Governor Mike Pence of Indiana was the Republican vice presidential nominee in 20166; however, former President Donald Trump and current U.S. Senator J.D. Vance (R-OH) are not “officials” for purposes of the SEC Pay-to-Play Rule or other applicable pay-to-play rules, and contributions to the Trump/Vance campaign will not be restricted under these rules.

In addition to the SEC Pay-to-Play Rule and other federal pay-to-play rules noted above, many states and localities have also adopted pay-to-play rules that are applicable to persons who contract with their governmental agencies. Campaign contributions to other candidates may trigger disclosure obligations or certain restrictions under such rules. As political contributions can lead to unintended violations of the SEC Pay-to-Play Rule or other applicable pay-to-play rules, advisers should assess whether any of these rules present a business risk in the 2024 election cycle and take appropriate steps to protect themselves.

From a compliance standpoint, some investment advisers have implemented pre-clearance procedures for all employees, which can permit an investment adviser’s compliance team to confirm that political contributions by employees will not lead to unintended consequences. Compliance teams may also consider periodic checks of publicly available campaign contribution data to confirm contributions by employees are being disclosed pursuant to applicable internal policies.

Should you have any questions regarding the content of this alert, please do not hesitate to contact one of the authors or our other lawyers.

Footnotes

1 The rule applies to “covered advisers,” a term that includes investment advisers registered or required to be registered with the SEC, “foreign private advisers” not registered in reliance on Section 203(b)(3) of the Investment Advisers Act, and “exempt reporting advisers.”

2 The rule applies to “covered associates,” which are defined for this purpose as: (i) any general partner, managing member, executive officer, or other individual with a similar status or function; (ii) any employee who solicits a government entity for the investment adviser and any person who supervises, directly or indirectly, such employee; and (iii) any political action committee (PAC) controlled by the investment adviser or by any person described in parts (i) or (ii).

3 An “official” means any individual (including any election committee of the individual) who was, at the time of a contribution, a candidate (whether or not successful) for elective office or holds the office of a government entity, if the office (i) is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity; or (ii) has authority to appoint any person who is directly or indirectly responsible for, or can influence the outcome of, the hiring of an investment adviser by a government entity.

4 Wayzata Investment Partners LLC, Investment Advisers Act Release No. 6590 (Apr. 15, 2024).

5 Under the SEC Pay-to-Play Rule, covered associates (but not covered advisers) are permitted to make a de minimis contribution up to a US$350 amount in an election in which they are able to vote without triggering the two-year “time-out.”

6 Clifford J. Alexander, Ruth E. Delaney & Sonia R. Gioseffi, Impact of Pay-to-Play Rules in the 2016 Election Cycle, K&L GATES (Aug. 18, 2016), https://www.klgates.com/Impact-of-Pay-to-Play-Rules-in-the-2016-Election-Cycle-08-18-2016.

Copyright 2024 K & L Gates
by: Ruth E. Delaney, Richard F. Kerr of K&L Gates
For more news on the SEC Pay-to-Play Rule, visit the NLR Securities SEC section.

Veep Urges DEA to Reschedule Marijuana “As Quickly as Possible”

In case you missed it, Fat Joe visited the White House late last week to discuss federal marijuana policy. 2024, man.

During a roundtable discussion with Mr. Joe (?), Kentucky Gov. Andy Beshear, and several individuals who have received pardons from President Joe Biden for prior federal marijuana convictions, Vice President Kamala Harris “urged the Drug Enforcement Administration to work as quickly as possible on its review of whether to reschedule marijuana as a less-dangerous drug.”

The vice president, in direct terms, stated that it was “absurd” and “patently unfair” to keep the drug in the same highly restrictive tier as heroin and fentanyl. “Nobody should have to go to jail for smoking weed,” Harris said, according to NPR, framing the issue of marijuana reform as a criminal justice issue that disproportionately hurts Black and Latino men.

As to timing, Harris reportedly said: “I cannot emphasize enough that they need to get to it as quickly as possible, and we need to have a resolution based on their findings and their assessment.”

The vice president’s remarks follow Biden’s urging of marijuana rescheduling during the recent State of the Union. Biden has previously granted pardons for federal crimes of marijuana use and possession and has encouraged governors to do the same for state law convictions.

We previously reported that in October 2022 Biden ordered Secretary of Health and Human Services Xavier Becerra “to initiate the administrative process to review expeditiously how marijuana is scheduled under federal law.” Last August, we noted that the U.S. Department of Health and Human Services officially recommended to DEA that marijuana be moved from Schedule I to Schedule III under federal law.

Last Friday, Harris expressed urgency, concluding: “I’m sure DEA is working as quickly as possible and will continue to do so… And we look forward to the product of their work.”

On the one hand, you could be excused for believing this was simply an inconsequential meeting on a Friday during Spring Break without any chance for advancing the ball. I think, however, that it is meaningful to hear the sitting vice president unequivocally and in stark terms call for the prompt rescheduling of marijuana and make the case that it would be unfair not to do so. In that sense, the marijuana industry has come a long way.

© 2024 Bradley Arant Boult Cummings LLP
For more on Marijuana, visit the NLR Biotech, Food, Drug section.

8 Asian American Attorneys Who Shaped the History of the United States

Asian Americans are the fastest-growing racial or ethnic group in the United States according to a recent analysis by Pew Research Center. In celebration of May as Asian American and Pacific Islander (AAPI) Heritage Month, we wanted to showcase eight Asian American attorneys who shaped the nation and paved the way for justice and civil rights of those who came after them.

8 Asian American Attorneys Who Made U.S. History

  • Hong Yen Chang
  • Dalip Singh Saund
  • Hiram Fong
  • Minoru Yasui
  • Herbert Choy
  • Patsy Mink
  • Dale Minami
  • Kamala Harris

1. Hong Yen Chang (1859-1926)

 

 

 

Hong Yen Chang was born in 1859 in Guangdong, China and was one of 120 students that were selected to study in the United States through the Chinese Educational Mission in 1872. He became the first Chinese American lawyer in the U.S. in 1888, but not without facing racism and countless rejections.

He had strong recommendations for bar admission after graduating with honors from Columbia Law School in 1886, but was denied because the Chinese Exclusion Act prevented him from gaining U.S. citizenship. Although Chang was already naturalized in 1887, the New York Supreme Court deemed it invalid but later passed a law to allow him to apply to the bar again. When he moved to California, he was rejected from the Bar as the state Supreme Court ruled the naturalization certificate issued by New York as invalid. Chang was never able to practice law in California but instead established a career in foreign policy. After petitions, he was posthumously granted admission to the California State Bar in 2015.

2. Dalip Singh Saund (1899-1973)

 

 

 

Dalip Singh Saund was born in Punjab, India in 1899 and immigrated to the United States through Ellis Island to study agriculture and mathematics. He became heavily involved in the movement for immigrants of South Asian descent to become naturalized U.S. citizens. This led to Congress passing the Luce-Celler Act of 1946 which allowed more South East Asians to immigrate to the U.S. each year, and allowed them to become naturalized U.S. citizens. After he became a naturalized U.S. citizen in 1949, he ran for election as local judgeship and won the post. In 1955, he ran for a seat in the House of Representatives and became the first Asian American, the Indian American, and the first Sikh American to be elected to Congress and was re-elected twice.

3. Hiram Fong (1906-2004)

 

 

 

Born in 1906, Hiram Fong was born in Honolulu, Hawaii, and was one of eleven children. His family had immigrated from China in 1872 to work on sugar plantations in Hawaii. He obtained his law degree from Harvard Law School in 1935 and during World War II, served as a major Judge Advocate in the US Army Air Force. When Hawaii achieved statehood in 1959, Fong ran for office and became the first Asian American U.S. Senator, serving from 1959 to 1977, and the first Asian American to receive delegate votes for his party to be nominated for President of the United States.

4. Minoru Yasui (1916-1986)

 

 

 

Minoru Yasui was born in Oregon and was one of the few Japanese Americans who fought the unfair laws targeting Japanese Americans and immigrants after the Pearl Harbor attacks. He earned his law degree at the University of Oregon where he was also a member of the U.S. Army Reserve Officer Training Corps (ROTC) program, and passed the bar in 1939. After the attack on Pearl Harbor, Yasui attempted to report for duty to serve in the military but was continuously denied and was later arrested by the FBI as an enemy alien.

In 1942, he opened a private law practice in Portland to help Japanese Americans that were being displaced due to Executive Order 9066, which imposed curfews, travel bans, and the Japanese American internment camps during World War II. Yasui deliberately broke curfews and refused to evacuate his home to be sent to an internment camp, so he was sentenced to a year in prison. He was deemed as not a U.S. citizen by the judge but was later rightfully recognized as a U.S. citizen and was moved to an internment camp. He was released in 1944 and practiced law in Colorado, later becoming involved in community relations and fought for reparations.

5. Herbert Choy (1916-2004)

 

 

 

Herbert Choy was the first Asian American and Hawaiian native to serve as a federal judge and the first Korean American lawyer admitted to the bar. He established a private law practice in his home state of Hawaii with Hiram Fong, served as Attorney General for Hawaii, and was later nominated to the U.S. Court of Appeals for the Ninth Circuit in 1971. He served on the Ninth Circuit court until 2004 when he passed away.

6. Patsy Mink (1927-2002)

 

 

 

As a third-generation Japanese American, Patsy Mink grew up in Hawaii and graduated from the University of Chicago Law School in 1948. She faced sexism when she was refused the right to take the bar exam in Hawaii, due to losing her Hawaiian territorial residency when she got married. She challenged the statute and was able to pass the bar but was rejected from jobs because she was married and had a child, so she started her own practice in 1953. She made waves challenging discriminatory laws and became the first woman of color and the first Asian American woman elected into Congress when she won a seat in 1964. She served for 12 terms and later ran for the 1972 presidential election, making her the first East Asian American woman to seek a presidential nomination.

7. Dale Minami (1946-)

 

 

 

Dale Minami fights for the civil rights of Asian Pacific Americans in many of his cases. He led the reopening of the case of Korematsu v. United States in the early 1980s which helped overturn Fred Korematsu’s criminal conviction 40 years after the case closed. Korematsu had been criminally convicted for refusing to move to a Japanese American internment camp during World War II. Minami received several awards including the ABA’s Thurgood Marshall and Spirit of Excellence Awards.

8. Kamala Harris (1964-)

 

 

 

Kamala Harris made history when she was elected in 2020 as the first female U.S. Vice President, and the first Asian American and first African American vice president. Prior to becoming the 49th vice president of the United States, Harris served as the District Attorney of San Francisco from 2004 to 2011. Harris is the first woman, the first African American, and the first South Asian American to serve as Attorney General of California in 2010 before serving as Senator in 2016.

Recognizing Asian American and Pacific Islander Attorneys

The Asian American experience is truly a diverse and nuanced one as shown from the background of just these eight influential attorneys in U.S. history. During this Asian American and Pacific Islander Heritage Month, we should all learn from the rich history of America.

© Copyright 2021 PracticePanther

ARTICLE BY Nina Lee of PracticePanther
For more articles on the legal industry, visit the NLR Law Office Management section.