This document summarizes various regulations that financial firms and contractors must follow regarding political contributions: - The SEC, FINRA, MSRB, and CFTC all have rules that limit or prohibit political contributions from regulated entities to officials who control government funds to prevent pay-to-play practices. - Firms must have compliance programs to monitor employees' contributions and prevent violations, but manually searching donation records can be time-consuming. - Six Lambda's tools automatically scrape contribution data daily from 50+ sources to identify any new donations from an employee that would violate rules, alerting firms within 24 hours. - They currently serve large asset managers, private equity firms, and politically active companies to help safeguard them

1. Cover your (political) bases.

2. Financial Firms and Contractors regulated by multiple entities
● Securities Exchange Commission Rule
206(4)-5, which limits, and in many cases,
prohibits political contributions by
investment advisors to elected officials or
candidates who have direct or indirect
control over governmental pension funds;
● Financial Industry Regulatory Authority
Rule 2030, which generally follows the
SEC's Rule 206(4)-5;
● Contractors to Municipal, State, and
Federal Governments must follow a
dizzying array of pay-to-play regulations.
● MSRB: Municipal Securities
Rulemaking Board Rule G-37, which
prohibits brokers, dealers, and municipal
security dealers from engaging in the
municipal securities business if they have
made disqualifying political contributions
to covered municipal officials; and
● Commodity Futures Trading
Commission Regulation 23.451, which
prohibits swap dealers from offering or
entering into a swap with a governmental
Special Entity if a disqualifying political
contribution was made within a two-year
lookback

3. How are you safe guarding your firm?
● Typically, companies offer pre-clearance forms on their employee’s
automated compliance software
● When employees neglect to fill out this pre-clear or disclose, contributions can
result in costly issues for the entire firm
● Manually searching for political contributions can take weeks of monotonous
work for compliance professionals
● Most all compliance programs are missing a thorough verification layer
That’s why we formed Six Lambda.

4. Solution: Six Lambda Monitoring Tools
● We protect you and your
employees, by scraping
contribution data at the federal,
state, and local level.
● Even if your employee does not
pre-clear a campaign donation you
will know about it through our
rigorous search capabilities

5. We manually collect all political giving
at the Federal, State & Local level
daily and alert you if we see a new
transaction from one of your
employees within 24 hours of posting.
This data comes from over 50
sources, and we standardize it into a
central database to easily query daily
for your firm.
How it works:

6. We currently serves clients . . .
. . . managing over $180 billion in assets under management.
. . . in Private Equity, Hedge Fund, and Mutual Fund
companies.
. . . companies with very politically active principals.

7. 9 Recent Enforcement Actions
Over the past several years, the
SEC has stepped up their
enforcement actions regarding
campaign finance rule
violations.
Adams Capital Management $45,000
Aisling Capital $70,456
Alta Communications $35,000
Commonwealth Venture Management $75,000
Cypress Advisors $35,000
FFL Partners $75,000
Limerock Management $75,000
NGN Capital $100,000
The Banc Fund Company $75,000

8. Case Study #1 - Pershing Square Management
● A former analyst made a single $500 contribution to a candidate for Governor of Massachusetts in
excess of the $150 limit
● The analyst failed to pre-clear the contribution and as a result it was made without the apparent
knowledge of the firm’s chief compliance officer
● The analyst made the contribution for personal reasons (family friend request) more than 2 years
after the initial investment was made with the firm
● The analyst never spoke with the state’s investment representatives
● The analyst was not an executive or an equivalent and given his job description may not have been
considered a “covered associate”
● FINE: $75,000

9. Case study #2: TL Ventures
● 1999 - TL Ventures raised money for a fund including a $35 million commitment from the PA State
Employees’ Retirement System (SERS)
● 2000 - TL raised money for another fund including a commitment from both SERS and the City of
PA Board of Pensions and Retirement of $50 million
● Both funds included a five-year investment period and a 10-year total life cycle
● 2011 - Firm co founder Bob Keither made political donations to a Philadelphia Mayor and PA
Governor Tom Corbett
● These investments seem to be legal, but the SEC determined that each of these funds also had the
possibility of requesting a pair of one-year extensions following the 10 year life cycle.
● These extensions meant the pensions would be charged for additional fee expenses
● Even if no fund extension had been required the co-founder was prohibited from making a
contribution until all regular fee payments had ceased
● TL Ventures settled on fine of $300,000

10. Contact us:
Nicole Lundergan (610) 632-6606
VP - Sales and Marketing nicole@sixlambda.com