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As Campaign 2000 Heats Up, Beware of Newly Amended State Campaign Contribution Restrictions
Although a great deal of fanfare accompanied Governor Rowland’s veto of a major State campaign finance reform bill this Spring, the Governor did sign into law new restrictions on certain individuals’ ability to contribute to the campaigns of candidates for State public office, effective immediately. The Connecticut legislature amended existing restrictions on the ability of certain individuals affiliated with legal, investment and financial institutions from making certain campaign contributions. Enacted to deter corruption or malfeasance in the Office of the Treasurer regarding the investment of state trust funds, the new law was passed in response to the types of criminal abuses to which the former State Treasurer recently pled guilty. The new law prohibits state campaign contributions from owners, managers, officers, directors, partners and certain responsible employees of firms that provide “investment services,” if the firm transacts business with the State Treasurer.
Formerly, Connecticut law barred certain persons affiliated with “investment services” firms that transact business with the State Treasurer from contributing to the campaigns of candidates for the Office of Treasurer.
The new legislation amends Section 9-333n(f), adding a very broad prohibition on campaign contributions by certain individuals affiliated with “investment services” firms. Section 9-333n(f)(5) now provides:
No individual who is an owner of a firm which provides investment services and to which the Treasurer pays compensation, expenses or fees or issues a contract, and no individual who is employed by such a firm as a manager, officer, director, partner or employee with managerial or discretionary responsibilities to invest, manage funds or provide investment services for brokerage, underwriting and financial advisory activities which are in the statutory and constitutional purview of the Treasurer, may make a contribution to, or solicit contributions on behalf of, an exploratory committee or candidate committee established by a candidate for nomination or election to any public office.
The law continues to define “investment services” as “legal services, investment banking services, investment advisory services, underwriting services, financial advisory services or brokerage firm services.”
This legislation bars covered individuals within covered organizations from contributing to the campaigns of candidates for any State office. Covered organizations are limited to those firms that provide “legal services, investment banking services, investment advisory services, underwriting services, financial advisory services or brokerage firm services,” and “to which the Treasurer pays compensation, expenses or fees or issues a contract.”
Covered persons include owners, managers, officers, directors, partners and employees with “managerial or discretionary responsibilities to invest, manage funds or provide investment services for brokerage, underwriting and financial advisory activities which are in the statutory and constitutional purview of the Treasurer” of those firms.
Violations of Connecticut’s campaign finance laws carry potentially severe liability, both civil and criminal. Those persons and firms who may be subject to this new restriction should seek an analysis of their situation with respect to the applicability of this recent legislative development before making any State campaign contributions this Fall.