2024 is an election year in the US, and with it comes a heightened focus on pay-to-play compliance. That means that, as a compliance professional, you must be extra vigilant to ensure that your firm stays on the right side of the regulations!
Here are some of the key trends and challenges to watch out for in 2024 to help you navigate this potentially tricky landscape.
Increased Enforcement
Last month, the Securities and Exchange Commission (SEC) charged an investment advisory firm for a pay-to-play violation involving a campaign contribution. The firm agreed to pay a $60,000 civil penalty. Charges like this send a clear message: the SEC is serious about pay-to-play compliance.
Corrie Scoby, a COMPLY Compliance Consultant, warns, “The SEC has signaled its intentions to enhance enforcement actions.” In other words? Companies should be prepared for a rise in audits and investigations, even those including technology.
Beyond the Obvious: Hidden Pay-to-Play Risks
While direct financial contributions are a clear violation of pay-to-play rules, there are more subtle areas that can trip up the unwary. Here are some hidden risks to consider:
- In-kind donations: Offering goods or services to a campaign at a discount or for free can be considered an illegal contribution. In some states, spouses of covered associates who make political contributions can trigger violations.
- Fundraising committees: Joining a candidate’s fundraising committee can be seen as a form of indirect support, triggering cooling-off periods.
- Seemingly insignificant contributions: It’s important to have a clear understanding of your jurisdiction’s de minimis contributions dollar amount in order to ensure covered associates aren’t giving beyond the acceptable levels.
Staying Compliant in 2024
To effectively navigate the pay-to-play compliance landscape in 2024, here are some key steps compliance professionals can take:
- Implement Clear Procedures
Establish clear and comprehensive policies outlining acceptable and unacceptable political contributions.
- Educate employees
Ensure all employees, particularly those involved in sales, lobbying, or political activities, understand pay-to-play rules and their implications.
- Monitor contributions
Proactively monitor all political contributions made by employees and the firm itself, regardless of perceived size or significance.
- Seek expert guidance
If unsure about a specific situation, consult with legal or compliance professionals specializing in pay-to-play regulations.
By following these steps and remaining vigilant, compliance professionals can help their organizations avoid costly penalties and reputational damage associated with pay-to-play violations. Remember, prioritizing pay-to-play compliance is not just about following the rules, it’s about protecting your organization’s integrity and fostering trust with government entities.
Pay-to-play Compliance with COMPLY
Adhering to the multitude of applicable rules and navigating risks like accidental and in-kind contributions can often lead to onerous, unmanageable manual tasks.
That’s where COMPLY comes in!
COMPLY offers tailored consulting and technology services designed to empower your firm. For instance, tools like the PolCon solution powered by illumis automates monitoring of political contributions on the federal, state, and local levels. COMPLY’s political contribution monitoring platform is specifically tailored to help financial institutions accurately and effectively operationalize pay-to-play regulatory compliance processes.
Ready to power up your pay-to-play compliance program? Let’s talk!