If there’s one man who could help Jay Gonzalez, the Democratic candidate for governor, it would be his former boss in the corner office, Deval Patrick, widely regarded as one of the party’s best orators.
But as Patrick prepares to campaign for Democratic congressional candidates in other states, he insists he cannot say one word about Gonzalez, his former budget director, who is badly trailing Governor Charlie Baker in polls and fund-raising.
Why so quiet? Because as a managing director at Bain Capital, Patrick says, he is barred under federal “pay-to-play” rules from saying anything about any candidates for state or local office.
That leaves Gonzalez to make his case to voters without the blessing of the last Democrat to beat Baker and the man who could best validate his experience managing the state budget as secretary of administration and finance from 2009 to 2013.
“It’s killing me,” Patrick insisted, throwing up his hands when a group of reporters recently tried to ask him about Gonzalez. “It’s killing me.”
But he may be overreacting, legal specialists said, at least when it comes to federal law.
The Securities and Exchange Commission’s pay-to-play rules are designed to prevent investment advisers from giving political candidates campaign contributions in exchange for contracts to manage public pension funds.
But legal specialists said the rules do not prevent investment advisers from speaking out about political candidates, as Patrick claimed.
“Under the SEC and related federal pay-to-play rules, an individual should be able, on his or her own time and at his or her own expense, to indicate a preference and voice support for a candidate in a state or local campaign,” said D. Mark Renaud, a partner at Wiley Rein in Washington, who specializes in campaign finance, lobbying, ethics, and pay-to-play laws. “Nothing in the rules prohibits such activities.”
Ciara Torres-Spelliscy, a professor at Stetson University College of Law, said the SEC’s pay-to-play rules are meant to shield securities markets from political corruption.
“These rules are really about not allowing big contributions to candidates that, once elected, will control who underwrites municipal bonds and who picks the investment advisers of lucrative public pension fund investments,” she said. “These rules should not impact the ability of someone on Wall Street or State Street to speak.”
The SEC made a similar point when it adopted the rule in 2010, writing that it did not intend to restrict investment advisers from “engaging in the vast majority of political activities, including making direct expenditures for the expression of their views, giving speeches, soliciting votes, writing books, or appearing at fund-raising events.”
But many investment firms — including Bain Capital — have adopted internal rules that are stricter than the law requires.
Renaud said investment firms are extremely cautious because they are worried about violating the SEC’s pay-to-play rules, which can trigger a two-year ban on managing public funds. The punishment is known in the industry as the “death penalty” because it banishes an entire company and can cost a firm millions of dollars in investment fees.
Bain Capital declined to comment. Doug Rubin, a Patrick spokesman, said: “Governor Patrick follows both the letter and spirit of the law and acts accordingly to ensure that there is not even an appearance of a conflict with the rules.”
An added plus of Patrick’s silence is that it allows the former governor — and by extension, Bain Capital — to avoid antagonizing Baker, an extremely popular governor who, according to recent polls, is more than likely to be overseeing state government for another four years.
Baker controls three seats on the nine-member board that oversees the $72 billion state pension fund. And Bain manages about $132 million for the fund — a relatively small amount. The state does not invest any pension money in Patrick’s fund at Bain Capital, called Double Impact.
While Patrick is shunning the governor’s race, he has ramped up his interest in national politics. He recently endorsed Representative Michael Capuano over Boston City Councilor Ayanna Pressley in a hotly contested Democratic primary and has said he is preparing to campaign for other US House and Senate candidates this fall, as he explores a potential presidential bid in 2020.
SEC rules allow investment advisers to endorse candidates for federal office because those officials do not pick the investors who manage public pension funds.
Gonzalez, meanwhile, finds himself lagging 40 points behind Baker in the most recent WBUR/MassINC poll. Gonzalez also had just $171,642 in his campaign account as of May 31, compared to $8.2 million in Baker’s account.
Gonzalez, however, said he is not concerned. He said his campaign is gaining momentum after capturing the support of 70 percent of the delegates at the state Democratic convention this month.
“Even though Deval Patrick can’t be a part of this, there are lot of other people who are,” Gonzalez said, “and I feel very good about winning the Democratic primary and the general election.”Michael Levenson can be reached at email@example.com. Follow him on Twitter @mlevenson.