Court Opinion

ID: 4407678
Source: CourtListenerOpinion
Date Created: 2019-06-18 15:00:37.736906+00
Date Added: 2024-06-11T07:49:56.215363
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 15, 2018             Decided June 18, 2019

                       No. 18-1111

NEW YORK REPUBLICAN STATE COMMITTEE AND TENNESSEE
               REPUBLICAN PARTY,
                   PETITIONERS

                             v.

         SECURITIES AND EXCHANGE COMMISSION,
                      RESPONDENT

          On Petition for Review of a Final Order
         of the Securities & Exchange Commission

    Edmund G. LaCour Jr. argued the cause for petitioners.
With him on the briefs were H. Christopher Bartolomucci and
Jason B. Torchinsky.

    Jeffrey A. Berger, Senior Litigation Counsel, Securities
and Exchange Commission, argued the cause for respondent.
With him on the brief was Michael A. Conley, Solicitor.

    Carter G. Phillips, Joseph Guerra, Tobias S. Loss-Eaton,
and Michael L. Post were on the brief for amicus curiae
Municipal Securities Rulemaking Board in support of
respondent.
                               2
   Before: PILLARD, Circuit Judge, and GINSBURG and
SENTELLE, Senior Circuit Judges.

    Opinion for the Court filed by Senior Circuit Judge
GINSBURG.

   Dissenting opinion filed by Senior Circuit Judge
SENTELLE.

     GINSBURG, Senior Circuit Judge: In 2016 the Securities
and Exchange Commission adopted Rule 2030, which
regulates the political contributions of those members of the
Financial Industry Regulatory Authority (FINRA), a self-
regulatory association of broker-dealers, who act as
“placement agents” –        i.e., individuals and firms that
investment advisers hire to help them secure contracts
advising a government entity. The Rule prohibits a placement
agent from accepting compensation for soliciting government
business from certain candidates and elected officials within
two years of having contributed to such an official’s electoral
campaign or to the transition or inaugural expenses of a
successful candidate. The New York Republican State
Committee (NYGOP) and the Tennessee Republican Party
petition for review of the SEC’s order approving Rule 2030,
on the grounds that: (1) the SEC did not have authority to
enact the Rule; (2) the order adopting the Rule is arbitrary and
capricious because there was insufficient evidence it was
needed; and (3) the Rule violates the First Amendment to the
Constitution of the United States. The SEC challenges the
petitioners’ standing to bring the case and defends the Rule
against these arguments.

    We hold the NYGOP has standing and deny its petition
on the merits. The SEC acted within its authority in adopting
                                3
Rule 2030; doing so was not arbitrary and capricious because
the SEC had sufficient evidence it was needed; and the Rule
does not violate the First Amendment in view of our holding
in Blount v. SEC, 61 F.3d 938 (1995), in which we upheld a
functionally identical rule against the same challenge.

                         I. Background

     The SEC adopted the challenged rule in response to
longstanding concerns about so-called “pay-to-play” activity
in the public pension market. We therefore begin by laying
out what prompted the SEC’s decision to regulate the
contributions of placement agents to candidates and
incumbents for elected office.

A. Pay-to-Play and Public Funds

     In many instances, local and state government officials
responsible for holding and managing public funds, such as
pension funds and tuition plans, are also responsible for
choosing investment advisers to manage plan assets. Political
Contributions by Certain Investment Advisers, Investment
Advisers Act Release No. IA–3043, 75 Fed. Reg. 41018,
41019/1 (July 14, 2010). 1 By 2010 an increasing number of
enforcement actions had revealed that some of these elected
officials chose investment advisers based upon whether the
would-be adviser had given them money or donated to their
campaign. 75 Fed. Reg. at 41019/3-20/3; id. at 41039 n.290.
For example, the SEC brought cases against the former
Treasurer of the State of Connecticut and other defendants,
1
  Henceforth, for the sake of simplicity, we follow the lead of the
SEC in using the term “public pension plan” to refer to any
investment program “sponsored or established” by a government
entity, “regardless of whether they are retirement funds.” 75 Fed.
Reg. 41018 n.3.
                              4
alleging the Treasurer had allocated pension fund investments
to fund managers in exchange for political contributions and
other payments made through the Treasurer’s “friends and
political associates.” Id. at 41020/1.

     Concerned that these practices distort the market for
investment advisory services, the SEC adopted a rule in 2010
regulating the political contributions of firms and individuals
registered under the Investment Advisers Act of 1940, which
prohibits any adviser from engaging “in any act, practice, or
course of business which is fraudulent, deceptive, or
manipulative.” 15 U.S.C. § 80b-6(4); see 17 C.F.R. §
275.206(4)-5. This “Advisers Act rule” makes it unlawful for
an investment adviser to provide services “for compensation
to a government entity within two years after a contribution to
an official of the government entity is made by the investment
adviser or any covered associate of the investment adviser.”
17 C.F.R. § 275.206(4)-5(a)(1). The rule was “modeled on”
Rule G-37 of the Municipal Securities Rulemaking Board
(MSRB), 75 Fed. Reg. at 41020/3, which the SEC had
approved in 1994 and which imposes a similar two-year
“time-out” upon a dealer in the municipal securities market
who has donated to a covered official. Self-Regulatory
Organization - Municipal Securities Rulemaking Board,
Exchange Act Release No. 34-33868, 59 Fed. Reg. 17621,
17622/3-25/3 (Apr. 13, 1994). The SEC modeled its rule
upon MSRB Rule G-37 in part because we had upheld that
rule against a first amendment challenge in Blount, and in part
because the SEC believes G-37 was successful in
“significantly curb[ing] pay to play practices in the municipal
securities market.” 75 Fed. Reg. at 41020/3, 41023/3; see
also Order Approving a Proposed Rule Change To Adopt
FINRA Rule 2030 and FINRA Rule 4580 To Establish “Pay-
To-Play” and Related Rules, Exchange Act Release No. 34-
78683, 81 Fed. Reg. 60051, 60065/1 (Aug. 31, 2016).
                              5

     The SEC understood the Advisers Act rule would not
address all instances of pay-to-play corruption. In particular,
it was aware of several cases in which an investment adviser
did not contribute directly to a candidate or incumbent but
instead acted through a placement agent. See 75 Fed. Reg. at
41037/3-38/1; Notice of Filing of a Proposed Rule Change To
Adopt FINRA Rule 2030 and FINRA Rule 4580 To Establish
“Pay-to-Play” and Related Rules, Exchange Act Release No.
34-76767, 80 Fed. Reg. 81650, 81651/1 (Dec. 30, 2015). For
example, a placement agent who funneled contributions to the
New York State Comptroller secured contracts for its client to
advise $250 million worth of pension fund investments. 81
Fed. Reg. at 60065/3; 75 Fed. Reg. at 41019/3-20/3. The SEC
was therefore “concerned that a rule that failed to address the
use of [placement agents] would be ineffective were advisers
simply to begin using ... placement agents” to get government
clients. 75 Fed. Reg. at 41037/3.

     Instead of barring investment advisers from hiring
placement agents, however, the SEC allowed an adviser to
retain a placement agent who is a member of the FINRA, 17
C.F.R. § 275.206(4)-5(a)(2)(i)(A); 15 U.S.C. § 78c(a)(26), if
the FINRA would impose restrictions upon its members that
were “substantially equivalent [to] or more stringent” than the
SEC’s parallel rule for investment advisers. 17 C.F.R. §
275.206(4)-5(f)(9)(ii); see Ga. Republican Party v. SEC, 888
F.3d 1198, 1200 (11th Cir. 2018); 81 Fed. Reg. at 60063/3
(noting the FINRA had agreed to “prepare rules for [the
SEC’s] consideration that would prohibit its [placement
agent] members” from engaging in pay-to-play activity).
                                6
B. FINRA Rule 2030

    In 2015 the FINRA proposed Rule 2030, which is
modeled after the Advisers Act rule and MSRB Rule G-37.
81 Fed. Reg. at 60053/1, 60057/2. Rule 2030(a), subject to
some exceptions, prohibits a FINRA member from

       Engag[ing] in distribution or solicitation activities for
       compensation with a government entity on behalf of
       an investment adviser that provides or is seeking to
       provide investment advisory services to such
       government entity within two years after a
       contribution to an official of the government entity is
       made by the covered member or a covered associate.

     In other words, if a placement agent makes a contribution
to a government official who can influence a government
entity’s choice of an investment adviser, see Rule 2030(g)(8)
(defining “official”), then the placement agent must wait two
years before he or his firm can accept payment for soliciting
that government entity on behalf of a client. The “two-year
time-out” is intended to serve as a “cooling-off period during
which the effects of a political contribution on the selection
process can be expected to dissipate.” 81 Fed. Reg. at
60053/1.

     Rule 2030(b) prevents circumvention of this primary
prohibition by forbidding a covered member or a “covered
associate” of a member from “solicit[ing] or coordinat[ing]
any person or political action committee” to make any
contributions to a covered official. See also Rule 2030(g)(2)
(defining “covered associate”). The covered member or
associate is also forbidden from “soliciting or coordinating
any person or political action committee to make any payment
to a political party of a state or locality of a government entity
                                7
with which the covered member is engaging in, or seeking to
engage in, distribution or solicitation activities on behalf of an
investment adviser.” Rule 2030(b)(2) (cleaned up). Put
another way, a placement agent may not solicit contributions
for a political party and later be paid to serve as a placement
agent for the state or locality of that party.

    Rule 2030(c)(1) sets forth an exception to the Rule for de
minimis contributions, allowing an associate of a FINRA
member firm to contribute up to $350 to a candidate or
incumbent if he or she is eligible to vote for that person;
otherwise the limit is $150.

     When the SEC approved FINRA Rule 2030 in 2016, the
NYGOP, along with the Tennessee and Georgia Republican
Parties, filed a joint petition in the Eleventh Circuit for review
of the SEC order. 81 Fed. Reg. at 60051; Ga. Republican
Party, 888 F.3d at 1201. The Eleventh Circuit held the
Georgia party did not have standing to challenge the order and
transferred the case to this court based upon the applicable
venue statute. Id. at 1205 (citing 15 U.S.C. § 78y(a)(1)).

                          II. Analysis

A. Standing

     In order to bring their challenge, the petitioners must
establish they have satisfied the “constitutional minimum” for
standing to sue, which requires that (1) they have suffered an
injury-in-fact, (2) caused by the challenged conduct; and (3) a
favorable decision is likely to redress that injury. Lujan v.
Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). If any one of
the petitioners has standing to raise a claim, then this court
has jurisdiction over that claim without regard to whether any
                               8
other petitioner also has standing. Carpenters Indus. Council
v. Zinke, 854 F.3d 1, 9 (D.C. Cir. 2017).

    Although we are typically skeptical about a petitioner’s
standing where, as here, neither petitioner is regulated by the
challenged rule, Lujan, 504 U.S. at 561-62, we hold the
NYGOP has met its burden by advancing “specific facts” to
support its claim to have suffered an injury-in-fact. Id. at 561;
Sierra Club v. EPA, 292 F.3d 895, 899 (D.C. Cir. 2002). The
NYGOP has submitted the affidavit of Francis Calcagno, a
placement agent covered by Rule 2030, stating that “if Rule
2030 were no longer in effect,” then he “would solicit
contributions for the NYGOP from [his] friends, family, and
other contacts.” Add. to Pet’rs’ Br. 18-19.

    An organization is obviously “harmed if its contributors
cease giving it money.” Taxation with Representation of
Wash. v. Regan, 676 F.2d 715, 723 (D.C. Cir. 1982) (holding
a nonprofit has standing to bring a first amendment challenge
against restrictions denying tax deductions to its contributors),
rev’d on other grounds, 461 U.S. 540 (1983). Hence, we hold
the NYGOP’s reduced ability to raise funds due to Rule 2030
constitutes a concrete and particularized injury for purposes of
Article III standing.

     The SEC claims Taxation is inapplicable because the tax
statute challenged in that case affected the entire donor base
of a nonprofit organization, whereas the NYGOP has not
shown placement agents affected by Rule 2030 constitute
more than a minority of its potential contributors. As the
petitioners point out, however, this argument addresses only
the degree of their injury. As we have long held, even a slight
injury is sufficient to confer standing; the size of the harm
therefore poses no jurisdictional barrier to the NYGOP’s
                              9
claim. See Tax Analysts & Advocates v. Blumenthal, 566 F.2d
130, 138 (D.C. Cir. 1977).

     The SEC next invokes Clapper v. Amnesty International
USA, 568 U.S. 398 (2013), to argue the petitioners’ risk of
harm is too speculative because it relies upon the decisions of
third parties not before us. In Clapper, the Supreme Court
held that certain attorneys and organizations did not have
standing to challenge a provision of the Foreign Intelligence
Surveillance Act of 1978 because they failed to show their
claimed injury – namely, that their communications with
overseas clients and contacts would be intercepted by the
Government – was “certainly impending.” Id. at 410-14. As
the Supreme Court later clarified, however, a plaintiff is not
limited to establishing injury-in-fact by showing that a harm
is “certainly impending”; it may instead show a “substantial
risk” that the anticipated harm will occur. See Susan B.
Anthony List v. Driehaus, 573 U.S. 149, 158 (2014). We
have, therefore, determined that “the proper way to analyze an
increased-risk-of-harm claim is to consider the ultimate
alleged harm ... as the concrete and particularized injury and
then to determine whether the increased risk of such harm
makes injury to an individual citizen sufficiently ‘imminent’
for standing purposes.” Attias v. Carefirst, Inc., 865 F.3d
620, 627 (D.C. Cir. 2017).

     We have already determined that the NYGOP’s reduced
ability to raise funds is a concrete and particularized harm to
the organization. The question now is whether the NYGOP
has shown it faces a “substantial risk” of this harm
materializing.

    We hold the NYGOP has met its burden. To be sure,
Calcagno has not shown with literal certainty that his contacts
would have donated to the NYGOP upon his request. But
                               10
Clapper does not require certainty; instead, it understandably
holds a plaintiff’s risk of harm cannot be based upon a
“highly attenuated chain of possibilities.” 568 U.S. at 410.
Unlike in Clapper, where the chain comprised several links,
“requir[ing] the assumption that independent decisionmakers”
– the Attorney General, the Director of National Intelligence,
and judges of the Foreign Intelligence Surveillance Court –
“would exercise their discretion in a specific way,” Attias,
865 F.3d at 626, here the plaintiff’s standing requires only the
single inference that at least one of Calcagno’s family,
friends, or contacts would have donated a few dollars to the
NYGOP had Calcagno asked him or her to do so. In our
view, that inference is eminently reasonable – indeed,
irresistible; the increased risk of at least some harm as a result
of the SEC’s decision to adopt Rule 2030 is therefore
substantial and not speculative. Cf. id. at 628-29 (contrasting
the substantial risk of identity theft posed by a data hack with
the “long sequence of uncertain contingencies” in Clapper).
We do not believe that a practical application of Article III
requires more than the affidavit before us.

    In short, we hold the NYGOP has Article III standing to
pursue this case. The NYGOP’s reduced ability to raise funds
due to Rule 2030 constitutes a non-speculative injury-in-fact,
which would be redressed were we to grant its petition.

B. Authority of the SEC

     We turn now to the petitioners’ challenge to Rule 2030 as
an ultra vires regulation of campaign finance. Pursuant to
Section 15A of the Securities Exchange Act of 1934, the SEC
“shall approve” a rule proposed by the FINRA – the only
registered national securities association, see Self-Regulatory
Organization Rulemaking, SEC. EXCH. COMM’N (Mar. 5,
2019), https://www.sec.gov/rules/sro.shtml – if it is
                               11
“consistent with the requirements of [the Act].” 15 U.S.C.
§ 78s(b)(2)(C)(i). Section 15A also authorizes the FINRA to
make rules to “prevent fraudulent and manipulative”
practices, “to promote just and equitable principles of trade,”
and to “remove impediments to and perfect the mechanism of
a free and open market and a national market system, and, in
general, to protect investors and the public interest.” 15
U.S.C. § 78o-3(b)(6); see also 81 Fed. Reg. at 60062/3-63/1.

     The SEC says Rule 2030 comes within this authority
because pay-to-play transforms the process by which
government officials select investment advisers into one in
which political contributions, rather than the competence and
cost of investment advisers, drive the award of contracts. See
81 Fed. Reg. at 60063/1-65/3. As a result, public pension
funds are more likely to be managed by less qualified
investment advisers and to pay higher fees, to the detriment
both of the funds’ beneficiaries and of taxpayers. Id. at
60065/2; 75 Fed. Reg. at 41022/2-3. Indeed, pay-to-play
presents a familiar agency problem in which the agent, who
selects advisers for the fund, has an interest that diverges from
that of his principals – the beneficiaries. This is not a self-
correcting problem: Investment advisers and placement agents
who decline to pay are put at a competitive disadvantage. See
Blount, 61 F.3d at 945-46.

     We agree with the SEC’s view of its authority. As we
said in Blount, 61 F.3d at 945, regulating pay-to-play
practices in the municipal bond market is within the authority
of the SEC to reduce distortion in financial markets:

       “Pay to play” practices raise artificial barriers
       to competition for those firms that either
       cannot afford or decide not to make political
       contributions. Moreover, if “pay to play” is the
                               12
       determining factor in the selection of an
       underwriting syndicate, an official may not
       necessarily hire the most qualified underwriter
       for the issue.... “Pay to play” practices
       undermine [just and equitable] principles [of
       trade] since underwriters working on a
       particular issuance may be assigned similar
       roles, and take on equivalent risks, but be
       given different allocations of bonds to sell –
       resulting in differing profits – based on their
       political contributions or contacts.

Id. This reasoning, of course, is not limited to the market for
municipal securities at issue in Blount; it applies with equal
force to the pension funds at risk of corruption in this case.
See 81 Fed. Reg. at 60063/2-3 (“[P]ublic pension plans are
particularly vulnerable to pay-to-play practices”).

      The petitioners first complain this view of the SEC’s
authority is too expansive. In support, they cite California
Independent System Operator Corp. v. FERC, 372 F.3d 395
(2004) (CAISO), in which we held the Federal Energy
Regulatory Commission (FERC) exceeded its statutory
authority when it ordered a state-created utility corporation to
adopt a method for selecting members of its board, in
derogation of the method prescribed by a state statute. The
FERC claimed it was acting pursuant to its authority to
regulate a “practice” affecting a rate collected by a public
utility, id. at 399, but after analyzing the meaning of that word
in the Federal Power Act, id. at 398-401, we concluded the
“breathtaking scope” of the FERC’s interpretation was
unreasonable. Id. at 401.

    The petitioners here do not explain how CAISO bears
upon the present case. To be sure, both cases involve a
                              13
federal agency accused of acting outside the bounds of its
authority, but there the similarity ends. The reasoning in
CAISO is addressed to the specific provisions of the Federal
Power Act, and the petitioners do not explain how it might in
any meaningful way affect our analysis of the Exchange Act.
Nor do the petitioners marshal any evidence to draw into
question our observation in Blount that there is a “self-
evident” connection “between eliminating pay-to-play
practices and the Commission’s [twin] goals of ‘perfecting the
mechanism of a free and open market’ and promoting ‘just
and equitable principles of trade.’” 61 F.3d at 945.

      The petitioners argue in the alternative that the Congress
surely “could not have intended to delegate a decision of such
... significance to an agency.” Pet’rs’ Reply Br. 14 (quoting
FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120,
160 (2000)). Rather, the argument goes, the Congress has
reserved to itself the authority to determine when a political
contribution poses a risk of corruption, because it has chosen
to set limits directly through the Federal Election Campaign
Act of 1971 (FECA). As evidence that the Congress intends
to dictate when limits may be adjusted or imposed, the
petitioners cite a provision of the FECA that specifies
contribution limits shall increase based upon changes in the
price index, 52 U.S.C. § 30116(c), as well as FECA
provisions that bar contributions from certain groups, such as
national banks and foreign nationals, §§ 30118, 30121, but
not from placement agents.

     Because none of these provisions bears upon the SEC’s
authority to uproot pay-to-play corruption in financial
markets, we take the petitioners’ argument to be that
provisions of the later-enacted FECA work an implied repeal
– a term the petitioners understandably reject – of the SEC’s
                              14
pre-existing authority to regulate pay-to-play activity under
Section 15A of the Exchange Act.

      As the SEC points out, however, the Supreme Court has
instructed that when “statutes are capable of coexistence, it is
the duty of the courts, absent a clearly expressed
congressional intention to the contrary, to regard each as
effective.” J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l,
Inc., 534 U.S. 124, 143-44 (2001); see also Radzanower v.
Touche Ross & Co., 426 U.S. 148, 154 (1976) (describing
“two well-settled categories of repeals by implication: (1)
where provisions in the two acts are in irreconcilable conflict
... ; and (2) if the later act covers the whole subject of the
earlier one .... But, in either case, the intention of the
legislature to repeal must be clear and manifest”) (cleaned
up). We do not take this duty lightly. See FTC v. Ken
Roberts Co., 276 F.3d 583, 593 (D.C. Cir. 2001) (“Because
we live in an age of overlapping and concurring regulatory
jurisdiction, a court must proceed with the utmost caution
before concluding that one agency may not regulate merely
because another may”) (internal quotation omitted). In our
view, that the Congress has increased the contribution limits
to keep pace with inflation and that it has prohibited certain
groups from making contributions is not evidence of a “clear
congressional intention” to preclude the SEC from limiting
campaign contributions that distort financial markets.

    Finally, the petitioners make a related but distinct claim,
based upon Galliano v. U.S. Postal Service, 836 F.2d 1362
(D.C. Cir. 1988), that the “first-amendment-sensitive”
provisions of the FECA limiting individual contributions
“displace” any authority the Exchange Act may have
conferred upon the SEC to set further restrictions. Pet’rs’ Br.
33-34 (citing Galliano, 836 F.2d at 1370). In Galliano, we
held the United States Postal Service could not enforce its
                              15
statutory authority to prevent “false representations” in the
mail by imposing certain disclosure requirements for political
mail on top of those specifically required by the detailed
disclosure provisions of the FECA, which reflect a delicate
“balance of interests ... deliberately struck by Congress” in
light of the first amendment considerations involved in
regulating campaign finance. 836 F.2d at 1370. Similarly, as
the SEC emphasizes, we were concerned that the procedures
used by the Postal Service to adjudicate whether a defendant
had made a “false representation” through the mail would
have bypassed the “precisely drawn” dispute resolution
process prescribed by the FECA. Id. at 1371.

     At the outset, we note that in Galliano, which was
decided prior to Blount, we were at pains to analyze the
authority of the Postal Service in a manner that “reduce[d]
constitutional doubt,” id. at 1369, with respect to two
questions: (1) whether the Postal Service’s effort to “regulate
solicitations for political contributions” was consistent with
the First Amendment and (2) “if so, then as a matter of first
amendment due process, [whether] such solicitations may be
regulated without a prior judicial determination of the
existence vel non of first amendment protections.” Id. at 1370
n.7 (cleaned up); see also Ken Roberts Co., 276 F.3d at 593
(describing Galliano as “relying on the First Amendment and
the canon of constitutional doubt in holding that the [FECA]
partially preempted the postal fraud prescriptions”). Although
the First Amendment is surely implicated in the present case
as well, Blount, as described below, has since clarified that
the SEC’s pay-to-play rules are not constitutionally infirm
under the law of this Circuit. Moreover, our concern in
Galliano with “first amendment due process” is simply not
relevant here. Whereas we were concerned in Galliano about
whether there would be sufficient judicial review of the Postal
Service’s case-by-case determinations of what is a
                              16
misrepresentation and what is protected speech, id. at 1369,
1370 n.7, here we review only a facial challenge to whether
the bright line of Rule 2030 violates the First Amendment.
We are not therefore compelled by Galliano to resolve the
allegedly overlapping authority of the SEC and the FEC by
holding only one of them may regulate in a way that touches
upon political contributions.

     Galliano might nevertheless have given the petitioners
some traction had the Supreme Court not later decided POM
Wonderful LLC v. Coca-Cola Co., 573 U.S. 102 (2014),
which supersedes some of this court’s reasoning in Galliano.
(Indeed, it is unclear to what extent Galliano has survived that
decision.) The Court in POM held that labeling regulations
implementing the Food, Drug, and Cosmetic Act (FDCA) do
not preclude a business from bringing a claim against a
competitor for unfair competition arising from false or
misleading advertising in violation of the Lanham Act. As
the SEC rightly claims, the reasoning in POM weighs heavily
in its favor. The Court began its analysis with the text of the
two statutes, noting neither contains an express limitation on
Lanham Act claims, which is “of special significance because
the Lanham Act and the FDCA have coexisted” for 70 years.
Id. at 113. Similarly, neither of the relevant statutes in this
case contains a provision limiting the reach of the other, and
the first pay-to-play rule adopted by the SEC (MSRB Rule G-
37) has coexisted with the FECA for 25 years. Furthermore,
in determining that the Congress did not “intend the FDCA to
preclude Lanham Act suits,” id. at 121, the Court reasoned
that the two statutes “complement each other in major
respects .... Although both statutes touch on food and
beverage labeling, the Lanham Act protects commercial
interests against unfair competition, while the FDCA” and
hence, we might add, the labeling regulation implementing it,
“protects public health and safety.” Id. at 115. Similarly, the
                               17
FECA and the Exchange Act, as instantiated by the SEC’s
pay-to-play rules, can peacefully coexist: Although both
regimes touch upon political contributions, the FECA is
meant to protect elections from the perceived untoward
effects of over-limit campaign contributions by whomever
made, whilst the Exchange Act, as implemented by Rule
2030, is meant to protect the financial markets from the
perceived untoward effects of over-limit contributions made
by placement agents. See Blount, 61 F.3d at 944 (“[I]n
Buckley and Austin the legislature was interested in clean
elections, whereas here the SEC is interested in clean bond
markets”).

     In so holding, we reject the petitioners’ argument that the
FECA is incompatible with the Exchange Act because the
general $2,700 contribution limit set by the FECA serves as a
“safe haven.” Pet’rs’ Reply Br. 18; see Galliano, 836 F.2d at
1370. This argument is not tenable after POM: The Court
there considered and rejected a similar contention, reasoning
that the implementing regulations of the FDCA should not be
viewed as a “ceiling on the regulation of food and beverage
labeling” because the “Congress intended the Lanham Act
and the FDCA to complement each other.” Id. at 119. Just as
the Court observed in POM that “[i]t is unlikely that Congress
intended the FDCA’s protection of health and safety to result
in less policing of misleading food and beverage labels than in
competitive markets for other products,” id. at 116, so too we
think it unlikely the Congress intended the FECA’s protection
of the electoral process to result in less policing of corruption
and inefficiency in the financial markets.

     We are similarly unpersuaded by the petitioners’
argument that the FECA leaves no room for the SEC to
impose its own restrictions simply because the FECA is more
detailed. As the Court said in POM, the “greater specificity
                               18
[of one law] would matter only if [the two laws] cannot be
implemented in full at the same time.” 573 U.S. at 118.
Because, as shown above, the Exchange Act and the FECA
can both be fully implemented without conflict, it matters not
that the FECA is more detailed.

     Finally, the petitioners’ assertions to the contrary
notwithstanding, the “exclusive jurisdiction” of the FEC to
enforce the FECA, see 52 U.S.C. § 30106(b)(1), is no bar to
our conclusion that the SEC may enforce the Exchange Act to
reduce distortion in financial markets. Rule 2030 does not
purport to give the SEC the ability to enforce provisions of
the FECA. Cf. POM, 573 U.S. at 116-17 (explaining that
although the FDA has exclusive authority to enforce the
FDCA, “POM seeks to enforce the Lanham Act, not the
FDCA or its regulations”).

C. Arbitrary and Capricious

    In their next line of attack, the petitioners claim the order
adopting Rule 2030 is arbitrary and capricious, in violation of
the Administrative Procedure Act, 5 U.S.C. § 706(2)(A),
because the SEC has not shown the Rule targets corruption
beyond that already prevented by federal and state laws
against bribery or by the FECA.

     We do not believe the federal and state laws prohibiting
bribery are adequate to address pay-to-play activity, as the
petitioners suggest. Laws against bribery “deal with only the
most blatant and specific attempts of those with money to
influence governmental action,” Wagner v. FEC, 793 F.3d 1,
15 (D.C. Cir. 2015) (quoting Buckley v. Valeo, 424 U.S. 1,
27-28 (1976)); “corruption and its appearance are no doubt
more widespread in the contracting process than our criminal
dockets reflect.” Id.; see also id. at 25.
                              19

     Nor is the FECA a solution to the problem: The SEC
adopted Rule 2030 precisely because it was aware of several
instances in which a placement agent’s contribution to a
government official – lawful under the FECA – influenced
that official’s decision to award an advisory services contract.
See 75 Fed. Reg. 41019/2-20/3, 41037/3. In adopting the
Rule, the agency explained that placement agents played a
“central role” in several pay-to-play scandals involving
FECA-compliant contributions to officials in New York,
Connecticut, and California. 81 Fed. Reg. at 60065/3; see
also 75 Fed. Reg. 41019/2-20/2; id. at 41019/3 n.17; id. at
41039/3 n.290.

     The petitioners minimize the significance of this
evidence, arguing the SEC’s examples do not show that
“most, many, or even more than a few publicly disclosed
$2,700 federal contributions or similar contributions made to
state and local officials by placement agents will involve the
kind of quid pro quo arrangement” the Rule aims to prevent.
Pet’rs’ Br. 44. That is true, but it would make no sense to
require the SEC to show that quid pro quo arrangements are,
as the petitioners put it, “rampant,” id.: A contribution is
corrupting even if it cannot be traced to the subsequent award
of a contract for advisory services because in this market “a
contribution brings the donor merely a chance to be seriously
considered, not the assurance of a contract.” Blount, 61 F.3d
at 945. (Indeed, it could hardly be otherwise whenever a
candidate or incumbent receives several contributions from as
many would-be advisers.) Not surprisingly, in Blount the
record contained “no evidence of specific instances of quid
pro quos,” yet we rejected the same argument in the form that
the harms being targeted by MSRB Rule G-37 were “merely
conjectural.” 61 F.3d at 944. As we explained then in
analyzing whether MSRB Rule G-37 violated the First
                              20
Amendment, the contributions at issue “self-evidently
create[d] a conflict of interest” and, although actual
corruption is difficult to detect, the “risk of corruption is
obvious and substantial.” Id. at 944-45. Accordingly, “no
smoking gun is needed where ... the conflict of interest is
apparent, the likelihood of stealth great, and the legislative
purpose prophylactic.” Id. at 945; see also Buckley, 424 U.S.
at 29-30 (rejecting a challenge to the contribution limit in the
FECA that “most large contributors do not seek improper
influence,” because it is too “difficult to isolate suspect
contributions”).

D. The First Amendment

     We turn, finally, to the petitioners’ contention that Rule
2030 violates the First Amendment. As a threshold matter,
however, we must determine the standard to which the Rule
should be held. The petitioners, of course, urge us to subject
Rule 2030 to strict scrutiny on the ground that we are
reviewing an action by the SEC as opposed to the Congress,
which they say alone has the “expertise” to weigh the first
amendment considerations involved. Pet’rs’ Br 52. This
novel theory runs up against our precedent holding the
“closely drawn” standard, which is “a lesser but still rigorous
standard of review” prescribed by the Supreme Court,
“remains the appropriate one for review of a ban on campaign
contributions,” Wagner v. FEC, 793 F.3d at 5-6 (citing
several Supreme Court cases, the most recent of which is
McCutcheon v. FEC, 572 U.S. 185, 197 (2014) (plurality
opinion)). We therefore ask whether Rule 2030 is closely
drawn to serve a “sufficiently important” governmental
interest. Id. at 7-8.

   As the SEC points out, we answered this question when
we upheld MSRB Rule G-37 against the first amendment
                              21
challenge in Blount. Because MSRB Rule G-37 is identical in
every constitutionally relevant way to FINRA Rule 2030,
Blount compels our holding for the SEC in this
indistinguishable case. Then, as now, the Supreme Court has
said that “preventing corruption or the appearance of
corruption are the only legitimate and compelling government
interests thus far identified for restricting campaign
finances,’” FEC v. Nat’l Conservative Political Action
Comm., 470 U.S. 480, 496-97 (1985)); Blount, 61 F.3d at 944;
see also Wagner v. FEC, 793 F.3d at 8, 22 (restrictions on the
first amendment right to make political contributions may be
particularly necessary in the “contracting context,” which
“greatly sharpens the risk of corruption and its appearance”
because “there is a very specific quo for which the
contribution may serve as the quid: the grant or retention of
the contract”). We determined MSRB Rule G-37 survives
even strict scrutiny because the rule restricts only a “narrow
range of ... activities for a relatively short period of time.”
Blount, 61 F.3d at 947-48; see also Wagner v. FEC, 793 F.3d
at 26 (“The availability of other avenues of political
communication can thus be relevant, although it is of course
not dispositive”). Rule 2030 contains identical safeguards
and therefore survives our review today; its restrictions are
closely drawn to further a compelling governmental interest,
as can be seen in the specific instances of quid pro quo
conduct identified by the SEC. See Part II.C above; 81 Fed.
Reg. at 60066/1-2.

     Rather than attempt to twist the logic of Blount in their
favor, the petitioners advance two reasons for thinking our
precedent is no longer good law. First, they invoke the
plurality opinion in McCutcheon for the proposition that
“Blount relied heavily on several strands of reasoning that the
Supreme Court has since rejected.” Pet’rs’ Br. 50. Under the
petitioners’ blinkered reading of that opinion, the present case
                              22
runs afoul of the Court’s admonition that a “‘prophylaxis-
upon-prophylaxis approach’ requires that we be particularly
diligent in scrutinizing the law’s fit.” 572 U.S. at 221.

     McCutcheon, of course, involved an aggregate limit on
political contributions that was “layered on top [of the base
limits prescribed by the FECA], ostensibly to prevent
circumvention of the base limits.” Id. But the holding of
McCutcheon is not that a belt and braces approach is
necessarily unconstitutional, but that the court must be
“particularly diligent in scrutinizing the law’s fit” with the
governmental interest it is supposed to serve. Id. And so we
did in Blount by applying strict scrutiny, a standard even more
exacting than the “closely drawn” standard we apply now, to
evaluate the first amendment claim against MSRB G-37. 61
F.3d at 943-48.

     Second, the petitioners would have us distinguish Blount
because this court was not there asked to consider the
“disparate impact that a restriction like Rule 2030 will have
on candidates running for the same seat” where one candidate
is a covered official and the incumbent (or another candidate)
is not. Pet’rs’ Br. 52. In support of their claim that this
disparity necessarily makes the Rule unconstitutional, the
petitioners quote dicta from two cases but disregard their
reasoning: Davis v. FEC, 554 U.S. 724, 738 (2008), and
Riddle v. Hickenlooper, 742 F.3d 922, 929 (10th Cir. 2014).

    The operative question in both cases was not simply
whether the challenged rule had a disparate effect, but
whether the difference was “justified by the primary
governmental interest proffered in its defense.” Davis, 554
U.S. at 738 (cleaned up); see Riddle, 742 F.3d at 928. In
Davis, the Supreme Court held the Millionaire’s Amendment
to the Bipartisan Campaign Reform Act, which raised the
                              23
contribution limit for a candidate if a rival candidate
expended more than a certain amount of personal funds, could
not withstand first amendment scrutiny. 554 U.S. at 740-41.
Although the Court noted it has “never upheld the
constitutionality of a law that imposes different contribution
limits for candidates who are competing against each other,”
id. at 738, the Court invalidated the law not because of the
disparate effect upon the candidates, as the petitioners
suggest, but because the Government’s interest in “level[ing]
electoral opportunities for candidates of different personal
wealth” is not a “legitimate government objective,” id. at 741:

       Because § 319(a) imposes a substantial burden on the
       exercise of the First Amendment right to use personal
       funds for campaign speech, that provision cannot
       stand unless it is justified by a compelling state
       interest. No such justification is present here.

Id. at 740 (internal quotation omitted). In contrast, the Court
has repeatedly – and, indeed, in the same case – recognized
that the prevention of “corruption and the appearance of
corruption” can justify an abridgment of first amendment
rights as long as the limits are “closely drawn” to serve that
important interest. See id. at 737; McCutcheon, 572 U.S. at
191-92; FEC v. Nat’l Conservative Political Action Comm.,
470 U.S. at 496-97.

     Riddle, in which the Tenth Circuit invalidated a Colorado
statute as a violation of the Equal Protection Clause of the
Fourteenth Amendment to the Constitution of the United
States, 742 F.3d at 930, is likewise no help to the petitioners.
The state law at issue set a lower limit on contributions to
write-in candidates ($200) than to major-party candidates
($400). Id. at 924, 926. The court determined those limits
were “ill-conceived” to advance the State’s claimed interest in
                              24
preventing corruption or its appearance: “The statutory
classification might advance the State’s asserted interest if
write-ins, unaffiliated candidates, or minor-party nominees
were more corruptible (or appeared more corruptible) than
their Republican or Democratic opponents. But the
Defendants have never made such a suggestion.” Id. at 928.
In stark contrast, the SEC, in keeping with our observation in
Wagner v. FEC, 793 F.3d at 22-23, persuasively counters that
an elected official who can influence the award of contracts is
indeed more susceptible to corruption than an opponent who
cannot exert the same influence. Accordingly, we agree with
the SEC that any disparate effect from Rule 2030 is a feature,
not a flaw, of the narrow tailoring of the Rule; hence the Rule
is indeed closely drawn to fit the important governmental
interest behind it.

                       III. Conclusion

     For the reasons set out in Part II above, we hold the
NGYOP has standing to sue. On the merits, we conclude the
SEC (1) had the authority to adopt Rule 2030, (2) has justified
doing so based upon both specific instances of quid pro quo
corruption and upon the inherent tendency toward an
appearance of corruption arising from the targeted
contributions of placement agents; and (3) has shown the Rule
does not violate the First Amendment because it was closely
drawn to advance a sufficiently important governmental
interest. For those reasons the petition for review is

                                                       Denied.
     SENTELLE, Senior Circuit Judge, dissenting: I do not join
my colleagues in the judgment denying this petition, not because
I would grant the petition, but because I would dispense with it
by dismissal for want of jurisdiction. As the Supreme Court
reminds us, in order to bring an action in federal court a
petitioner carries the burden of establishing that it has standing
to bring the action. See, e.g., Susan B. Anthony List v. Driehaus,
573 U.S. 149, 158 (2014). To establish standing, the petitioners
would have to show (1) that they have suffered an injury-in-fact;
(2) that injury was caused by the challenged conduct of the
defendant or respondent; and (3) that a favorable decision in the
litigation would likely provide redress for the injury. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). Petitioners
have failed to meet the first and most basic step of this three-part
constitutional minimum, as well as the second. First, they have
established no injury-in-fact.

     The majority opinion sets forth the facts underlying this
litigation. I have no quarrel with their understanding of the
facts, but reach a different legal conclusion based on the facts
before the court. I therefore will make reference to the facts
only as necessary to support my legal reasoning. As the
majority acknowledges, neither petitioner’s conduct is regulated
by the respondent’s action, Rule 2030, and therefore they do not
claim the near-automatic standing of a regulated entity.
Petitioners assert instead that NYGOP has established standing
on the theory that an organization is “harmed if its contributors
cease giving it money.” See Taxation with Representation of
Washington v. Regan, 676 F.2d 715, 723 (D.C. Cir. 1982), rev’d
on other grounds, 461 U.S. 540 (1983). While this may be a
valid theory, it simply does not apply to this case. Neither of
petitioners has shown that any contributor has stopped
contributing because of the action of the Securities and
Exchange Commission.
                                 2

      For a harm to meet the standard for the first requirement of
standing, it must be an actual or at least “certainly impending”
injury. Clapper v. Amnesty Int’l USA, 568 U.S. 398, 401 (2013).
The Supreme Court has, as the majority notes, given a slightly
relaxed construction to the effect of the “certainly impending”
standard by recognizing that a petitioner may cross the bar of the
first standing requirement by establishing a “substantial risk”
that the anticipated harm will occur. See Susan B. Anthony, 573
U.S. at 158. Nonetheless, the very language of the Supreme
Court in Susan B. Anthony establishes that for the risk of an
anticipated harm to substitute for actual injury at the first step of
the standing analysis, that risk must not only exist but be
substantial. Petitioners have not carried the burden of
establishing a substantial risk.

     In an attempt to meet its weighty burden, NYGOP has
submitted the affidavit of Francis Calcagno, a placement agent
covered by Rule 2030. Calcagno cannot attest to any injury-in-
fact that has occurred to the petitioners, but only swears that if
it were not for the SEC’s rule he would solicit contributions for
the NYGOP from his friends, family, and other contacts. As the
majority recognizes, he cannot attest with certainty that any of
his contacts would contribute to petitioners in the absence of the
rule.

     Petitioners argue that the affidavit brings them within the
precedent of Taxation with Representation. However, that case
only held that standing is established for an organization “if its
contributors cease giving it money.” Calcagno’s affidavit
establishes no such facts. At most, it establishes that he believes
that if it were not for the rule he would speak to unnamed
contacts, friends, and relatives on behalf of the petitioners, and
that some of those unnamed contacts, friends, or relatives could
contribute. This is not the establishment of a substantial risk.
This is at most speculation.
                                3

     Many cases hold that speculation is not the same as
establishing injury-in-fact for purposes of standing. “Although
imminence is concededly a somewhat elastic concept, it cannot
be stretched beyond its purpose, which is to ensure that the
alleged injury is not too speculative for Article III
purposes—that the injury is certainly impending.” Clapper, 568
U.S. at 409 (citing Lujan, 504 U.S. at 565 n.2). Thus, we have
repeatedly reiterated that “threatened injury must be certainly
impending to constitute injury in fact, and [] allegations of
possible future injury are not sufficient.” Id. at 398 (internal
quotations omitted).

     Petitioners’ argument for standing does not survive
examination as required by Clapper. Their “theory of future
injury is too speculative to satisfy the well-established
requirement that threatened injury must be ‘certainly
impending.’ ” Id. at 401 (quoting Whitmore v. Arkansas, 495
U.S. 149, 158 (1990)).

     Even if the majority is correct in its holding that this is a
sufficient showing of injury, petitioners’ claims founder on the
second step of the standing analysis. That is, even if petitioners
have established that they suffer injury-in-fact, they have not
established that the injury-in-fact is caused by the act of
respondent. Both this court and the Supreme Court have held
that when the establishment of injury depends on the volitional
act of a third party, the claimant has not established standing as
against the respondent.

     Again, I would follow the teachings of the Supreme Court.
In Clapper the Court stated, “[w]e decline to abandon our usual
reluctance to endorse standing theories that rest on speculation
about the decisions of independent actors.” 568 U.S. at 414.
                               4

     To summarize, as the Supreme Court did in Clapper,
petitioners “bear the burden of pleading and proving concrete
facts showing that the defendant’s actual action has caused the
substantial risk of harm. Plaintiffs cannot rely on speculation
about ‘the unfettered choices made by independent actors not
before the court.’ ” Id. at 414 n.5 (quoting Lujan, 504 U.S. at
562).

     Therefore, rather than deny the petition, I would dismiss it
for want of jurisdiction.