A Tale of Two Vice Presidents: Pay-to-Play and the Running Mates

dollar signIt was the best of times, it was the worst of times. For investment advisers and others subject to the pay-to-play rules, that is. Although both vice presidential picks have gubernatorial experience, because Mike Pence is a sitting governor and Tim Kaine is a former governor, there are certain pay-to-play rules that apply to contributions to Trump/Pence that do not apply to Clinton/Kaine. Thus, the Pence pick has important implications for many companies and firms engaged in the financial services industry.

As reported by various news outlets, Governor Pence’s role with the Indiana Public Retirement System subjects contributions to the Trump/Pence ticket to the SEC’s and other pay-to-play rules. Violations of these rules can carry significant penalties. And the shadow of the pay-to-play fundraising restrictions has even caused some to speculate that Pence should resign as governor.

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Copyright Tips for Political Campaigns and Their Consultants

No CopyrightsWhat do the campaigns of Sarah Palin, John McCain, Ted Cruz, Donald Trump, Newt Gingrich, Rand Paul, Ralph Nader, Ronald Reagan, Mike Huckabee, Barack Obama, and Mitt Romney all have in common? They have all faced claims of copyright infringement for their use of music or other works of art.

Candidates—and outside groups supporting or opposing them—often do not pay much attention to the copyright laws that apply to their activities, and sometimes use other people’s copyrighted works without obtaining the necessary licenses. For example, candidates use popular songs at rallies and campaign events and in YouTube videos and other online advertisements, without getting the required consent or license from the musician, songwriter, or performing rights societies. And sometimes they will use photographs or artwork and incorporate them into TV ads, digital ads, mailers, and emails, without obtaining, or making sure their contractors have obtained, the necessary permissions, consents, or licenses from the artists whose work they are using.

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The FEC Levels Fines on Nonprofits over Donor Disclosure

The question of when a politically-active, nonprofit 501(c)(4) group must publicly disclose its donors has been on the front burner in various states—most, like New York and California, have called for greater regulation, while others like Arizona have loosened the reins. At the federal level, silence has been the norm because the statute is generally read as only requiring disclosure by a 501(c)(4) (or other nonprofit such as a 501(c)(6)) if a donor contributes for the purposes of funding a particular ad. The FEC has consistently deadlocked on complaints alleging either that a donor gave for the purpose of supporting an ad or that a 501(c)(4) should be treated as a political committee and disclose all of its donors.

Last week, however, details were released from an FEC enforcement matter that met this stringent test and, as a result, the Commission levied fines totaling $233,000 against three nonprofit groups for failing to identify donors behind specific advertisements. These three settlement agreements, released as a group, provide significant guidance to nonprofit 501(c)(4)s and other actors as to what type of conduct will trigger donor disclosure at the federal level.

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New Mandatory IRS Notification Process for 501(c)(4) Nonprofit Organizations Finally Announced

tax forms and notesA substantial number of organizations exempt under Internal Revenue Code (Code) § 501(c)(4), and their individual officers and directors, may be subject to financial penalties if they do not file a Form 8976, Notice of Intent to Operate Under Section 501(c)(4), with the Internal Revenue Service (Service or IRS) on or before September 6, 2016.

On July 8, 2016 the IRS released a revenue procedure for implementing new statutory requirements for certain organizations that operate under section 501(c)(4) of the Internal Revenue Code. This requirement comes on the heels of the December 2015 enactment of the Protecting Americans from Tax Hikes (PATH) Act of 2015.

The recently released Revenue Procedure 2016-41 contains temporary regulations implementing the 501(c)(4) provisions of the PATH Act and describes the new Form 8976 and the related rules for filing it.

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Revisions to the Lobbying Disclosure Act Guidance: What These Changes Mean for You

The Lobbying Disclosure Act Guidance (Guidance) issued by the Clerk of the House of Representatives and the Secretary of the Senate was updated on June 15. The updates clarify currently existing provisions of the LDA, add additional examples, replace references to the LDA with hyperlinked citations to the U.S. Code, and remove references to Line numbers (the online reporting platform does not have Line numbers for drafting reports, but the final version of the reports available on the House and Senate websites still have Line numbers).  The Guidance is available here. A brief discussion of the changes to the Guidance is below:

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New York Imposes New Rules on Super PACs, Advocacy Groups, and Political Consultants

Last month, New York Governor Andrew Cuomo announced that he and legislators in the New York State Assembly had agreed on a “5 Point Ethics Reform Plan,” a sweeping proposal to create substantial changes in New York campaign finance law. The reform bill passed out of the legislature in mid-June and is expected to be signed by the governor any day.

Most of the significant changes will become effective 30 days after the governor signs the bill into law, meaning those preparing to get involved in New York state elections this fall will need to become familiar with the new requirements quickly. The changes are particularly important for entities considering making independent expenditures in those elections, as the bill creates a new definition for an “independent expenditure committee” and adds more detail to New York’s definition of “coordination.” Nonprofit organizations exempt from federal income tax under Internal Revenue Code section 501(c)(4) are also targets for further disclosure obligations under this new law. Finally, the bill includes specific registration and reporting requirements for “political consultants” – the first-ever provision of its kind in New York law – which may impact many consultants and other service providers active in the political arena.

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Cybersecurity: Key Steps for Campaigns, Consultants and Fundraisers For Protecting Campaign Data

CyberWith political campaigns increasingly subject to cybersecurity breaches this year, the Department of Homeland Security and the FBI are racing to educate campaign staffers against potential threats. According to reports, foreign governments and others have stepped up efforts to hack into Democratic and Republican campaigns to access sensitive information, including address and credit card information of campaign supporters. Ari Schwartz, the former Senior Director for Cybersecurity at the White House and current Managing Director  for Cybersecurity Services at Venable, talked with The Campaign Workshop to discuss these threats and the measures campaigns can take to prevent them in an interview that can be found here.  In the interview article, Ari shares some helpful tips that all campaigns, consultants, and fundraisers should consider.

About Venable’s Cybersecurity Risk Management Practice:

Venable’s Cybersecurity Risk Management Practice assists businesses and organizations with the cybersecurity risk management practices that are essential in today’s world. Our cybersecurity team leverages legal services, proven organization governance models, technological tools and expertise, insurance, and public relations to aid organizations with their risk management. Using the voluntary federal Cybersecurity Framework as a guide, we help entities set baselines and reduce risk without the fear of increasing their liability from regulatory enforcement, private litigation, or class action litigation that can lead to significant financial and reputational harm.

2016 Election: New Rules for Nonprofits in Arizona

By U.S. Government [Public domain], via Wikimedia Commons

For the rest of the 2016 election season, nonprofits in Arizona can be politically active without registering as a political committee. As long as they meet basic qualifications, nonprofits can run candidate ads, support ballot measures, and even make contributions, all without the burdens of registration, ongoing reports, and disclosure of donors.

Arizona concluded its 2016 legislative session in May with the passage of an important campaign finance law, House Bill 2296. This bill mirrors one passed earlier in the session, Senate Bill 1516. Both bills exempt certain nonprofit organizations from Arizona’s definition of a political committee, but SB 1516 would have only taken effect starting in 2017. HB 2296, on the other hand, makes these rules effective in time for the 2016 election. As of June 1, 2016, nonprofits active in Arizona elections will not have to register as a political committee and will be free from the regulatory obligations that come with being a political committee.

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A Guide to Supporting the 2016 Presidential Nominating Conventions: From Hosting Events to Writing a Check

By White House/Chuck Kennedy (White House (P090612CK-0875)) [Public domain], via Wikimedia Commons

Thinking about sponsoring or hosting an event at the presidential nominating conventions in Cleveland and Philadelphia?  Or considering giving free items to attendees?

Venable’s client alert summarizes recent guidance on convention events from the House and Senate ethics committees, and discusses both new and old ways that the national parties and the host cities are raising money to pay for the conventions.

Our Political Law Group has extensive experience advising companies, trade associations, and nonprofits in navigating the gift rules that apply to convention events, and making political contributions.

 

Setting Up and Operating a Super PAC

Interested in what it takes to set up a federal Super PAC? Take a look at Venable’s recently released white paper summarizing the key rules of the road, including:

  • Steps for creating a federal Super PAC
  • Avoiding illegal coordination with candidates
  • FEC and IRS reporting obligations
  • Advertising disclaimers

For those interested in Maryland elections, please also see our white paper summarizing the rules of the road for setting up and operating Maryland Super PACs.

With extensive experience advising federal, state, and local Super PACs and their donors, Venable’s Political Law Practice Group is ready to assist with all of your Super PAC legal needs in the 2016 election cycle and beyond.

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