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The Securities and Exchange Commission (SEC) came down on Goldman, Sachs & Co. with the largest pay-to-play penalties in history Thursday because one of its former investment bankers made improper campaign contributions to a Massachusetts politician while the firm was underwriting lucrative public contracts for the state.The $3.75 million penalty was part of an overall settlement of roughly $12 million through which Goldman neither admitted or denied the SEC’s findings.
The SEC contends Neil M. M. Morrison, a vice president in the Goldman’s Boston office, was substantially engaged in the gubernatorial campaign of then-Massachusetts state treasurer Timothy Cahill’s from Nov. 2008 to Oct. 2010. During this time, GS earned more than $7.5 million in underwriting fees from Massachusetts issuers. Morrison was fired by the company in Dec. 2010.
In a press release, the SEC said:
“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 municipal issuers for two years after the contributions.”
According to the SEC’s orders, the Morrison participated in fundraising, drafting speeches, communicating with reporters, approving personnel decisions, and interviewing at least one possible running mate for Cahill.
Robert Khuzami, Director of the SEC’s Division of Enforcement, said:
“The pay-to-play rules are clear: municipal finance professionals that use their firm’s resources to campaign on behalf of political candidates compromise themselves and the firms that employ them.”
The $12 million is more than a slap on the wrist, but it worked out better for Goldman than it did for Cahill. He lost the race and was indicted this year for alleging using state lottery funds to support his campaign.
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