Kasich campaign contribution could cost company $37 million

A $2,700 political donation to John Kasich’s presidential campaign could end up costing an investment company $37 million in fees in Ohio, according to filings with the U.S. Securities and Exchange Commission.

SEC rules prohibit an investment adviser from being paid by a government client for two years after the adviser or its executives make a political contribution to certain elected officials or candidates for federal office.

BlackRock, which manages more than $1 billion in Ohio employee deferred compensation funds, is asking the SEC to waive the rule.

BlackRock senior managing director Mark Wiedman made the contribution to Kasich’s campaign in January 2016 without disclosing it to BlackRock’s legal team.

The rule is designed to protect against “pay-to-play” politics in which political contributors are rewarded government business. In its filing with the SEC, BlackRock said Wiedman was not involved in pitching Ohio officials to work with BlackRock.

Wiedman has made 22 federal campaign contributions since 2006, totaling $59,700. He made the contribution to Kasich’s campaign at a luncheon fundraiser.

“The contribution was not motivated by any desire to influence the award of investment advisory business,” the company told the SEC. Instead, Wiedman, a long-time Republican who served in the George W. Bush administration, liked Kasich’s moderate policy positions, the company said.

BlackRock, which has $2.4 trillion in assets under management, said in its filing to the SEC that routine internal checks uncovered the contribution and its conflict with the SEC rules.

Wiedman requested a refund of the contribution, which was issued by the Kasich campaign in November.

Fees earned by BlackRock off of its business with Ohio state government have been placed in escrow, pending a ruling by the SEC on the waiver request, the company said. Working without compensation for two year years “would result in a financial loss of approximately $37 million, or 13,700 times the amount of the contribution,” BlackRock noted.

In a written statement, BlackRock said: “The contribution in question was made solely in support of Mr. Kasich’s presidential campaign and for no other purpose. Through BlackRock’s robust policies and procedures, we discovered the contribution in question, and both BlackRock and Mr. Wiedman worked together to promptly address the error, including obtaining a refund of the $2700 contribution. We believe that the proposed application for exemptive relief is fair and reasonable, and consistent with the intent of the relevant rule.”

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About the Author

Laura A. Bischoff

Laura Bischoff is our Columbus bureau reporter and covers politics and state government. She keeps a close eye on elected leaders, public employees and taxpayer money. Bischoff tries to write stories that inform voters, hold leaders accountable and strengthen democracy.