The SEC announced today that it has filed a “pay-to-play” case against Goldman, Sachs & Co. and one of its former investment bankers. The SEC alleges that Goldman and Neil M.M. Morrison, a former vice president in the firm's Boston office, made undisclosed campaign contributions to then-Massachusetts state treasurer Timothy P. Cahill while he was a candidate for governor. 

The SEC noted in its press release that the case "marks the first SEC enforcement action for pay-to-play violations involving 'in-kind' non-cash contributions to a political campaign." Instead of cash, Morrison is alleged to have conducted campaign activities for Cahill from the Goldman Sachs office during work hours.  He allegedly used the firm's resources to carry out campaign activities including fundraising, drafting speeches, communicating with reporters, approving personnel decisions, and interviewing at least one possible running mate.The SEC claims that 

Morrison's use of Goldman Sachs work time and resources for campaign activities constituted valuable in-kind campaign contributions to Cahill that were attributable to Goldman Sachs and disqualified the firm from engaging in municipal underwriting business with certain Massachusetts municipal issuers for two years after the contributions.  Nevertheless, Goldman Sachs subsequently participated in 30 prohibited underwritings with Massachusetts issuers and earned more than $7.5 million in underwriting fees.

The SEC alleges that Morrison also made an indirect cash contribution to Cahill by giving cash to a friend who then wrote a check to the Cahill campaign.

Goldman has agreed to settle the SEC's case by paying $7,558,942 in disgorgement, $670,033 in prejudgment interest, and a $3.75 million penalty. The penalty is the largest ever imposed by the SEC for Municipal Securities Rulemaking Board (MSRB) pay-to-play violations. The SEC's case against Morrison is ongoing.

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