U.S. judge dismisses Republican challenge to SEC pay-to-play rule

Reuters News
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Posted: Sep 30, 2014 7:20 PM

(Reuters) - A federal judge in Washington, D.C., on Tuesday dismissed a challenge by two state Republican parties to a Securities and Exchange Commission rule that imposes some restrictions on asset managers when they make campaign contributions.

U.S. District Judge Beryl Howell said she lacked jurisdiction to review the New York and Tennessee Republican parties' challenge to the pay-to-play rule, saying that role belonged to a federal court of appeals.

Adopted in 2010, the SEC rule prohibits advisers from receiving compensation for asset management services for two years after making a campaign contribution to public officials or candidates in a position to award contracts.

The plaintiffs claimed that the rule violated their free speech rights and had sought a preliminary injunction to block enforcement.

Campaign contributions from the asset management industry have traditionally been an important source of funds for political parties. Howell ruled just over a month before the 2014 midterm elections.

(Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker)