The US Supreme Court struck down some campaign finance limitations in McCutcheon v. Federal Election Commission. My first question was whether this court ruling would impact the Securities and Exchange Commission’s Rule 206(4)-5. The answer is “no.”
Mr. McCutcheon wanted to contribute $1776 dollars to a long list of political candidates. Each individual contribution is less than the $2600 federal limit. But the sheer number of candidates and political groups he targeted would violate the aggregate limits.
It was this aggregate limit that the Supreme Court struck down. The case did not strike down the individual limit.
The First Amendment protects political campaign contributions as a type of free speech. Therefore, any restrictions on political contributions must promote a compelling state interest and undertake the least restrictive means to further the state interest.
The Supreme Court has found that the government can regulate campaign contributions that target “quid pro quo” corruption or its appearance. Individual campaign contributions can be limited to prevent the dollars for political favors problem. That is a compelling state interest.
SEC Rule 206(4)-5 is specifically targeted at the corruption or appearance of corruption problem. The SEC can point to specific instances of government investments being tied to political contributions. It’s unlikely that the SEC’s pay-to-play rule will be overturned anytime soon.
References:
- McCutcheon v. Federal Election Comm’n
- Did the US Supreme Court’s ruling in McCutcheon v. FEC Put the Constitutionality of Some Pay-to-Play Laws in Doubt? by Stefan Passantino in Pay to Play Law Blog
- Court Issues McCutcheon V. FEC; Strikes Down Aggregate Limits by Jisha V. Dymond in Corporate Political Activity Law Blog
Image of the Supreme Court is by Matt H. Wade