Do political donations win pension fund deals?

Rattner gave $5,000 to Richardson's election committee in 2002, campaign finance records show. Long known as a major Democratic fundraiser and contributor, Rattner gave an additional $15,000 to Richardson in 2006, the records show. The gifts didn't pose a conflict because Richardson didn't vote on the Quadrangle investment, Wollmann said.

However, the panel in May approved a policy restricting campaign gifts by executives and others connected to firms that receive investments. It bans campaign gifts to elected and appointed officials serving or seeking posts "that may have influence over" the investment council and other state investment boards. The ban applies during the term of investment deals and for two years after. Had it been in effect then, it could have barred Rattner's 2006 contribution to Richardson. Quadrangle declined to comment.

The SEC pay-to-play proposal, unveiled July 22, would impose a two-year ban on pension fund awards to advisers that have given more than $250 in campaign contributions to any public official able to influence the fund's investments. The rule would cover donations to incumbents and challengers and would apply to investment executives, their firms and some employees.

The proposal is similar to a never-enacted 1999 SEC plan. It would bar investment advisers from directing political action committees or intermediaries to make such contributions. It would also bar investment advisers from paying intermediaries to solicit pension fund investments and would prohibit indirect contributions.

The SEC is scheduled to set a final vote on the crackdown after a 60-day public comment period.

"It's certainly an issue that we think, based on our enforcement experience, really deserves our attention," said Schapiro.

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