Late last month The Wall Street Journal and other news sources reported that employees in the financial services industry might not be able to contribute to Mitt Romney's presidential campaign because of a new pay-to-play rule enforced by the Securities and Exchange Commission. Although possibly true with respect to one already discarded approach to a fundraising program called a "victory fund," the impression of an inability to contribute, if left unchecked, could have a chilling effect on free speech. I aim to reverse that impression.

At issue was the Romney Victory fund, which announced in April that it would ask donors to give as much as $75,800. The total includes donations to Governor Romney's primary and general-election efforts, the Republican National Committee, and state party committees.  (This fund now also includes the National Republican Senatorial Committee and the National Republican Congressional Committee.)

The concern is that the articles – and misinformation promulgated by various sources – could sow confusion at many companies where elaborate systems are in place to "pre-clear" contributions by employees.  As a result of the rule effectuated by the SEC in 2011 and intended to prevent bribery and "pay to play" payments by Wall Street firms attempting to win business from state and local governments, investment companies (along with broker-dealers from an earlier rule) must analyze employee political contributions in order to avoid problems under the law.  This analysis is part and parcel of the preclearance programs.

In light of the enormous penalties for a violation (including the loss of current contracts with municipalities and preclusion from future contracts for two years), corporate policies are written, and compliance officers act, conservatively.  The analysis involved, given the national footprint of these firms and the sheer number of "covered associates," is expensive and time consuming.  As a result, there are built-in assumptions and protocols, and any bit of confusion or obfuscation could cause a compliance process to spit out the chilling response:  "No!" 

To help clear the air before a potential contributor's contribution is needlessly prohibited, outlined below are several avenues where compliance officers need not say no.  Because President Obama and Governor Romney present the same contribution issues, these examples apply to both candidates for persons covered by federal pay-to-play rules.

1.  Direct Campaign Contributions.  Individuals covered by the federal pay-to-play rules may make contributions directly to the Romney or Obama campaigns of up to $2,500 per election.

2.  Joint Fundraising Committees/Victory Committees. The Romney campaign now has, for certain fundraisers, an alternative "compliance allocation" through which no contribution solicited or contributed will be directed to a state party committee.  Instead, the funds will flow only to the Romney campaign and the national party committees.  Covered associates may contribute to Romney's victory fund through this alternative allocation and may contribute to any Obama victory fund that is similarly structured.

For joint fundraising or victory committees that include state party committees as recipients of funds and do not include any alternate allocation formula, a covered associate may write a check directly to the campaign and/or the national party committee even if one sends the check through the victory committee process.  This is out of an abundance of caution given the ultimate penalty for a violation and the vague regulatory language used by the SEC and the Municipal Securities Rulemaking Board.

Further, individuals also may make a direct contribution to a joint fundraising committee that only includes a candidate committee and national party committees.

3.  National Party Committees.  Individuals may contribute up to $30,800 to each of the national party committees (the Republican National Committee, National Republican Congressional Committee, National Republican Senatorial Committee, Democratic National Committee, Democratic Congressional Campaign Committee, and Democratic Senatorial Campaign Committee), with an aggregate limit of $70,800 for the 2011-2012 period to all federal party committees and PACs.  The national party committees may then use the funds to assist (in both an independent and coordinated fashion) candidates of the respective party, including the presidential candidates.

4.  SuperPACs.  Individuals may make unlimited contributions to SuperPACs that are supporting the candidacies of Governor Romney or President Obama.  (Such contributions will not necessarily have as much impact as the contributions above since the SuperPACs' activities may not be coordinated with any candidate or party committee or their agents, but the contributions may be unlimited.)

In the end, it is important that potential contributors and their compliance departments have the facts and law straight so that, with a speech and associational right as important as political contributions, they are not deterred by the pay-to-play rules where the rules do not apply.

Mark Renaud is a partner in Wiley Rein LLP's election law and government ethics practice. He advises corporations, trade associations, and political action committees. He can be reached at