BlackRock, Inc., a global investment management corporation, could lose $37 million in service fees after discovering one of its executives may have violated political contribution regulations during the 2016 presidential election.
In January 2016, BlackRock executive Mark Wiedman made a $2,700 contribution to John Kasich’s presidential campaign while attending a luncheon fundraiser for Kasich. This donation was discovered during a regulatory filing and has prompted a U.S. Securities and Exchange Commission (SEC) anti-corruption investigation. The SEC’s pay-to-play rules prohibit money managers who make political donations from accepting compensation from their public sector clients for two years after the donations are made. Firms may be exempt from the compensation ban if they provide proof of adequate compliance programs and that donations were not made with the intent of soliciting investment advisory business from government entities. BlackRock filed a petition for such exemption in May, but, without this immunity, the company could suffer a $37 million financial loss from a loss of compensation.
Ensuring that his donation was made out of personal political interests, Wiedman worked with BlackRock compliance managers to obtain a complete refund of the contribution. However, unless exemption is granted, the two-year compensation penalty will stand.
