(Bloomberg) — JPMorgan Chase & Co. has been advising a Tallahassee, Florida pension fund for free because of a $1,000 contribution that an executive at the bank made for the re-election campaign of that city’s mayor.
(Bloomberg) — JPMorgan Chase & Co. has been advising a Tallahassee, Florida pension fund for free because of a $1,000 contribution that an executive at the bank made for the re-election campaign of that city’s mayor.
On Dec. 14, JPMorgan asked the US Securities and Exchange Commission for an exemption to a “pay-to-play” rule barring the bank from getting paid for providing investment advisory services to the government for two years after such a donation.
The nation’s largest bank has agreed to forgo its fees for two years unless the SEC exempts it from the two-year payment ban.
That ban was triggered by a donation that JPMorgan’s Ashbel Williams made to the re-election campaign of Tallahassee Mayor John Dailey on Jan. 13. Williams — the former chief investment officer for the Florida State Board of Administration — began working for JPMorgan as a liaison between the bank and large investors on April 4.
While Williams received a refund from the Dailey campaign after he joined JPMorgan, the bank has agreed not to charge the pension plan fees unless the SEC issues an exemption.
The “pay-to-play” rule has generated controversy. In September the SEC fined four money managers for political donations of $1,000 or less, prompting SEC Commissioner Hester Peirce to issue a statement noting that these types of cases “do more harm than good.”
The SEC put the rule into effect in 2010, in response to public pension plans that selected money managers based on their political contributions. JPMorgan stated in its SEC filing that the bank’s policy has at all times “been more restrictive than what was contemplated” by the SEC rule.
JPMorgan declined to comment, and the SEC didn’t return a telephone call and email seeking comment. Peirce didn’t immediately respond to a call for comment.
JPMorgan managed almost $122 million on behalf of Tallahassee’s $2 billion pension fund at the end of September, according to the Office of the City Treasurer-Clerk. J.P. Morgan Investment Management Inc. had about $2.4 trillion in discretionary gross assets under management at the end of last year.
As a regulated investment adviser, JPMorgan has to give up compensation from a state or local agency if a top-level member of the firm, such as Williams, has made a campaign contribution to certain government officials during the prior two years.
The prohibition on receiving compensation from the government agency — which also applies to donations made prior to employment at the money manager — lasts for two years.
Williams, who lives in Tallahassee, supported Dailey in part because he believed the mayor would promote more favorable centrist and pro-free enterprise policies in the state capital, according to the filing. He reported the donation to JPMorgan through a pre-hire political contribution disclosure form in February, and, at the bank’s request, obtained the refund from the mayor’s campaign later in the month.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
