Compliance Issues Found in ‘Dozens of Cases’ Prior to Muni Pay-to-Play Alert, Says di Florio

Carlo di Florio, director of the SEC’s Office of Compliance Inspections and Examinations, discusses with Dana Wilkie the risk alert his office issued last week. The alert warned that firms may be violating Rule G-37 by doing business with municipal securities issuers within two years of their municipal finance professionals making contributions of more than $250 to the issuers’ elected officials.

Q: Rule G-37 has been around since the mid ’90s. Why issue an alert now?

A: Any time you’re in a political season, there’s going to be more campaign contribution activity. But these risk alerts also just started about 18 months ago.

Q: Why the change?

A: If we examine your firm and find issues and talk about it with you, it helps you strengthen your compliance program and that’s great, but it impacts just one firm. If we gather observations about a particular risk we see across our exams and put out a risk alert, that can have a broader impact on compliance.

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