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Pay To Play and the SEC
Chapman, Spira & Carson - Disscusion

From: Robert Spira
Date: 4/9/99
Time: 8:27:54 AM
Remote User:


The SEC is coming down hard on Pay to Play, we have enclosed a write up on there actions. SEC Calls for Crackdown on Pay to Play.

We downloaded it from American Lawyer Media and it was written by Lisa Fried.

Lisa I. Fried New York Law Journal April 8, 1999

When the Administrative Board of the Courts meets today to discuss the hotly debated rules on "pay to play," the judges will have before them an 11th-hour opinion from two Securities and Exchange Commission officials on the topic.

SEC officials sent a letter to the Administrative Board on Monday lobbing criticism at an American Bar Association position on pay to play, the practice of lawyers accepting political contributions in return for consideration as counsel on government legal matters.

The Administrative Board, which is made up of Chief Justice Judith S. Kaye and the presiding justices of the four Appellate Divisions, has indicated that it will consider the ABA's pay-to-play proposal, as well as those submitted by the Association of the Bar of the City of New York and the New York State Bar Association, before ruling on the subject.

In a letter to the Administrative Board, Harvey Goldschmid, SEC general counsel, and Paul Maco, director of the SEC's office of municipal securities, did not attack the ABA's proposed rules regarding pay to play, but rather the concerns expressed by the ABA's ethics committee about one of the proposed rules.

The first ABA proposal prohibits lawyers from making or soliciting political contributions for the purpose of obtaining or being considered to handle legal work. When the ABA ethics committee presented the proposed rule in January, it cautioned that it could be attacked constitutionally as overbroad and a "wholesale restriction on clearly protected conduct." The committee was concerned that the proposal would have a chilling effect on lawyers' speech and lawyers' ability to wield political influence.


Messrs. Goldschmid and Maco dimiss the ethics committee's constitutional concerns. "Giving money to a public official in order to obtain public business is not core free speech, even if it is given as a political contribution," they argued.

The April 5 letter, which was also sent to the ABA's ethics committee on March 31, asserts that there are no cases holding that a contribution given for the purpose of obtaining an award of public business is clearly protected by the First Amendment, and that future cases will not include such a holding.

Further, the letter states that the proposed rule is narrowly tailored to apply only to lawyers or law firms, "thus avoiding unnecessary abridgement of First Amendment rights."

The ABA's second proposed rule, which also is under consideration by the Administrative Board, would prohibit lawyers from accepting government work if they know that the work has been awarded because of solicitations or contributions for the benefit of the public official who can influence the award.

In their letter, Messrs. Goldschmid and Maco said that this proposed rule would be strengthened by including a "reason-to-know" clause. Having said that, they expressed concerns that implementation of this rule, by itself, would not curtail pay to play. They proposed instead that both the Administrative Board and the ABA consider adopting both rules.

For its part, ABA's ethics committee is reviewing all comments received about its proposed rules.

The Administrative Board of the Courts on Thursday, April 8 postponed until its June meeting a decision on conflicting proposals that would limit pay to play.

Last changed: September 26, 1999