6 Best Practices for Pay-to-Play Compliance

6 Best Practices for Pay-to-Play Compliance

Pay-to-Play in an Election Year

As we prepare for another election, it’s vital that your firm takes pay-to-play compliance seriously. The penalties for violating pay-to-play rules are severe and can include significant fines, reputational damage, and a 2-year time out period from receiving compensation advisory services. In 2018, the SEC fined a Texas-based venture capital firm $500,000 for prohibited political contributions. Regulators don’t take Pay-to-Play violations lightly, and as a result, it’s important to enforce compliance at your firm.

While some firms’ Code of Ethics prohibits employees from making political contributions, it’s still important to run testing and training to ensure full compliance. When it comes to pay-to-play, the penalties are too serious to assume employees understand and comply with the rules.

We recently outlined the current pay-to-play landscape in a best practices webinar with legal and compliance expert Bernadette Murphy of Vigilant Compliance. If you couldn’t attend, check out our six Pay-to-Play best practices below:

6 Best Practices to Follow

  • Include a pay-to-play policy in your compliance manual
  • Implement procedures for internal collection of data based on each rules’ Books and Records requirement
  • Conduct pay-to-play training for all employees annually, and additional training throughout the year to cover associates who solicit government entities
  • Require preclearance for political contributions above $150 from all employees
  • Have employees complete quarterly and annual certifications that show they have precleared and reported political contributions
  • After you’ve logged and precleared all political contributions, incorporate quarterly testing to verify all contributions that have been reported

To access the full webinar recording, reach out to info@complysci.com.