Former Goldman banker settles SEC 'pay-to-play' charges

Thu May 23, 2013 7:11pm EDT
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By Lisa Lambert and Jonathan Stempel

WASHINGTON/CHICAGO (Reuters) - A former Goldman Sachs Group Inc. investment banker has agreed to a five-year securities industry ban and a record fine to settle Securities and Exchange Commission charges that he broke rules against influence peddling to win bond underwriting business in Massachusetts.

Without admitting or denying wrongdoing, Neil Morrison, 38, accepted what the SEC said was the first industry ban for violating "pay-to-play" rules governing the $3.7 trillion municipal bond market.

He also agreed to a $100,000 civil fine, which the SEC called the largest individual penalty in such a case.

Thursday's settlement was announced eight months after Goldman struck its own $12 million settlement with the SEC over the case, which involved contributions to the 2010 gubernatorial campaign of then-Massachusetts State Treasurer Timothy Cahill.

Pay-to-play refers to the providing of cash or other contributions to public officials in exchange for political favors or the awarding of contracts.

"These tough sanctions against Morrison show that we take abuses of the pay-to-play rules in the municipal securities industry very seriously and will hold individuals accountable for their violations," Elaine Greenberg, chief of the municipal securities and public pensions unit of the SEC's enforcement division, said in a statement.

Thomas Kiley, a lawyer for Morrison, in an email said his client is happy to have resolved the matter, and agreed with Greenberg's characterization of the sanctions' severity.

"That this is the first time there has been an industry bar for a violation of the pay-to-play rule is a pretty good indication the law wasn't clear at the time of the conduct," Kiley said.   Continued...