Money & Politics | Daily Report

Securities and Exchange Commission investigators have raised questions about several campaign donations made to federal financial crisis watchdog Phil Angelides early in his term as California's treasurer.

In a report released last week, Securities and Exchange Commission investigators raised questions over $9,000 raised for the Angelides campaign in 2002 by a JPMorgan Chase & Co. executive. The report was meant to clarify pay-to-play rules for banking executives trying to obtain municipal bond business.

Within two years of the contributions, JPMorgan managed or co-managed more than $15 billion in underwritings for California state agencies, taking home $37 million in fees.

The timeline, according to the report, looked something like this:

In August 2002, a few months after he became CEO of JP Morgan Chase's Investment Bank, the Vice Chairman received a call from the California Treasurer, who was in the middle of his 2002 re-election campaign. The California Treasurer called about fundraising. Soon after the call, on August 20, 2002, the California Treasurer' re-election campaign sent the Vice Chairman a facsimile inviting him to co-chair an upcoming New York event.

The invitation indicated that the Vice Chairman would be required to raise $10,000 for the California Treasurer's campaign in order to serve as co-chair of the event. The Vice Chairman did not agree to co-chair the event, but subsequently solicited $10,000 for the California Treasurer. On September 10, 2002, the Vice Chairman forwarded an invitation for the California Treasurer's New York fundraising event to JP Morgan Chase's executive committee and to its Vice President for Government Relations with a handwritten note stating that the California Treasurer is an important client and soliciting their help in raising $10,000 for the event.

... Within two years after the Vice Chairman's contribution described above, JPMSI participated as senior manager or co-manager in more than 50 negotiated underwritings for California state agencies or instrumentalities for which the California Treasurer was an official of such issuers within the meaning of Rule G-37(g)(vi).7 The bonds underwritten sold for a total of more than $15.8 billion. For its roles in these underwritings and engagements, JPMSI received approximately $37 million in investment banking fees.

The report essentially says that executives who oversee bond underwriting are subject to the same campaign limits as the underwriters themselves.

Last July, Angelides was appointed to head a 10-member congressional commission that was created to unravel the root causes of the financial crisis. The commission is supposed to issue its report by December.

An Angelides spokesman told the Wall Street Journal that he would have given back the donation if he thought there was a problem.

Also last week, Hassan Nemazee, a former Angelides supporter and well-known Democratic fundraiser, pleaded guilty to running a $292 million Ponzi scheme built upon outsized bank loans.

Nemazee gave $1,500 to Angelides' gubernatorial campaigns in 2004 and 2006. It was the only state-level contribution we could find for Nemazee, who also raised money for Sen. Barbara Boxer. Boxer promised to return the contributions when Nemazee's scheme first started making headlines last year.