Contributions to Bond Elections

Piper Sandler is a national leader in underwriting and distributing bonds for state and local government, not-for-profit and real estate clients. As a participant in public finance underwriting, we are subject to complex and extensive regulation by federal and state regulatory agencies and self-regulatory organizations, including the Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB).

For example, the MSRB regulates political contributions and imposes limits on the nature and amount of contributions that municipal securities dealers may make to officials of public issuers. The principal MSRB rule in this area is Rule G-37, which addresses the potential conflict of interest in the practice of municipal securities dealers making political contributions to public officials who may be in a position to award or influence the awarding of public finance business. (See Rule G-37 imposes various limits on the types and amounts of political contributions that may be made by municipal securities dealers and their principal employees to public officials, seeking to prohibit so-called "pay to play" practices.

Current federal regulation does not prohibit the making of contributions or the provision of services to bond elections; however, federal regulations effective February 1, 2010 now require the disclosure of such contributions to the MSRB. Bond elections often are required to be held as a matter of state or local law to authorize the issuance of bonds to finance a particular project or use. Independent ballot measure committees are typically formed to conduct campaigns in support of bond elections and are considered essential for educating voters about the financial implications to taxpayers of the proposed debt and advocating approval of the ballot measure. Because governmental issuers are usually prohibited by state law from spending public funds to support bond elections, they are dependent on private third parties to support the campaign, either in the form of financial contributions or in-kind services (including the use of retained expert election consulting firms). Such private third parties could in some instances include municipal finance firms (such as Piper Sandler), law and accounting firms, construction firms and architects. Many state and local jurisdictions do not prohibit or otherwise restrict contributions by private parties to bond elections, although some do. As the local regulations differ on this subject, custom and practice differ as well across the country.

Piper Sandler endeavors to comply fully with all applicable local laws and regulations concerning contributions to bond elections. Further, in an effort to be transparent and avoid any appearance of impropriety, we have established internal guidelines concerning these kinds of contributions. In the case of requests for financial contributions, our guidelines provide that Piper Sandler will consider requests to the extent the request does not exceed a specific dollar amount and no more than a specific percentage of the projected budgeted amount for the bond election campaign. These limits reflect our best judgment about what is appropriate, and are intended to help ensure that we are not unduly influential as to any particular campaign. We will not make, or indicate a willingness to make, any financial contribution as a condition to being retained as an underwriter. These financial contributions are assumed by Piper Sandler as a general overhead cost, are provided on a voluntary basis only, and are not passed through to any client nor does Piper Sandler seek reimbursement for such costs. As may be required by federal, state and local law, we will make appropriate filings or other disclosures concerning financial contributions we make. For example, California requires that the firm's contributions exceeding $10,000 in any year be disclosed on a donor filing made with the California Secretary of State and available on a public Web site. Information about Piper Sandler contributions to bond elections in California since 2006 is available online. In addition, readers are directed to the MSRB's Web site at to view contributions by Piper Sandler and other dealers (incuding in-kind contributions) to bond ballot campaigns.

In the case of requests for Piper Sandler to provide bond election services, we may in some cases where permissible use an expert elections consulting firm to accommodate such requests. Bond election services are provided voluntarily and all fees and expenses of the retained consulting firm are assumed by Piper Sandler as a general overhead cost and are not passed through to any client nor does Piper Sandler seek reimbursement for such costs.

As has been our practice, we will continue to monitor regulatory and other developments with respect to this subject and adjust our policies and practices accordingly. Comments and questions concerning this subject may be directed to us via the Contact Us page of this website.