$350 Could Cost You Thousands: Wall Street Banks Clamp Down On Harris-Walz Donations

Vice President Kamala Harris’s selection of Minnesota Gov. Tim Walz as her running mate has created an unexpected challenge for Wall Street’s political donors.

Major financial institutions are now grappling with stringent regulations that could limit their employees’ ability to contribute to the Harris-Walz campaign.

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At the heart of the issue, reported initially by Business Insider, is the Securities and Exchange Commission’s “pay-to-play” rule, adopted in 2010. The regulation aims to prevent financial firms from influencing politicians through campaign contributions in hopes of securing lucrative government contracts, like managing state pension funds.

Citigroup issued a memo on Aug. 6 requiring most U.S. employees to seek pre-approval for donations to the Harris-Walz campaign. According to Business Insider, the policy affects staff across investment banking, wealth management, and other divisions, with only the consumer banking arm exempt.

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The stakes are high for financial institutions. Even small donations can trigger significant penalties. In 2017, Pershing Square faced a $75,000 fine after an analyst made a $500 contribution to a Massachusetts gubernatorial candidate. Similarly, JPMorgan Chase agreed to advise a Tallahassee, Florida pension fund pro bono for two years due to an employee’s prior political donation.

According to data cited by Insider from the Center for Responsive Politics, the situation contrasts the 2020 election, when Wall Street donors contributed over $74 million to Joe Biden’s campaign.

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The regulations extend beyond the SEC. Similar rules exist across other financial regulatory bodies, including the Commodity Futures Trading Commission and the Municipal Securities Rulemaking Board. The rules generally prohibit firms from providing certain services to state and local governments for two years after covered employees make political contributions to relevant officials.

However, according to Skadden, a New York City-based law firm, the regulations have some nuances. A de minimis exemption exists for individual contributions –$350 under SEC, CFTC, and FINRA rules and $250 under MSRB Rule G-37. The exemption applies regardless of whether the donor resides in Minnesota.

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Critics argue that the regulations may stifle political participation. Insider noted that in 2022, SEC Commissioner Hester Peirce criticized the pay-to-play rule, calling it an “exceedingly blunt instrument” that imposes “unique, unquantifiable costs on individuals by impeding their ability to participate in the political process.”

As the campaign progresses, financial institutions and their employees must navigate the regulatory landscape.

While some may find workarounds through donations to certain PACs or Super PACs not directly tied to the candidates, the overall effect will likely dampen Wall Street’s financial support for the Harris-Walz ticket.

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