A politically connected Chicago investment banking firm failed to tell federal regulators about a $25,000 contribution to the Democratic Party of Illinois in 2002 -- a violation of government rules, the Chicago Sun-Times has learned.
Loop Capital Markets LLC is one of the financial companies under scrutiny in a political corruption case in Philadelphia.
A Sun-Times review of the firm's political activities here in Illinois showed Loop did not notify the federal Municipal Securities Rulemaking Board about a $25,000 contribution to the Democratic Party of Illinois on Dec. 2, 2002.
Firms dealing in municipal securities must file quarterly reports with the board disclosing contributions to state political parties and to officials who award government business. The SEC enforces the rules.
"I think this was an oversight," said attorney George Simon, who represents Loop Capital Markets.
The "minor rule violation" could subject Loop to a fine of a "few thousand dollars" if the firm were found to be negligent, Simon acknowledged. "Every major brokerage firm in the United States has had to amend its reports," said Simon, who is with the law firm Foley & Lardner. "We will review our filings and that report will be amended, if necessary."
Possibility of penalties The Municipal Securities Rulemaking Board and the SEC would not comment on whether Loop should face any penalties.
Asked about past SEC enforcement actions against companies for failing to disclose political contributions, a spokesman pointed to a $25,000 fine that the agency issued against Oklahoma securities dealer Allen W. Counts in 2003.
Loop and chief executive officer James Reynolds have handed out more than $130,000 in political contributions in Illinois since 1998, state records show. Over that period, the minority-owned firm has landed work in connection with billions of dollars of bond deals for the state of Illinois, the city of Chicago and other government agencies in Illinois.
Under the Blagojevich administration, Loop has earned $1.49 million in fees from bond work, over half of which was made in a $10 billion state pension deal. Loop recently became an adviser on the Chicago Skyway bond deal.
Under the limit Loop's donations to Gov. Blagojevich, former Gov. George Ryan and Mayor Daley did not have to be reported to the Municipal Securities Rulemaking Board because they were under a $250-per-election cycle limit, Simon said.
Reynolds contributed $26,000 to a fund for Illinois Senate President Emil Jones, but the company did not report that to the Municipal Securities Rulemaking Board, either. The company does not think Jones is an "issuer official" who can directly affect whether Loop wins government business, Simon said.
Earlier this year, a federal indictment in Philadelphia referred to a "Company No. 4" sources have identified as Loop Capital Markets. Company No. 4 hired Philly attorney Ron White in 2003 to help the company win municipal bond deals in Pennsylvania, the document said.
Company No. 4's chief executive officer agreed to funnel $5,000 a month to White through a shell company to disguise White's influence, the indictment said. Loop was not accused of criminal activity. The case is set to go to trial next year.
Last year, Loop paid Burris & Lebed Consulting -- the firm of powerbroker and former Illinois Attorney General Roland W. Burris -- $5,000 a month to obtain municipal bond business here, records show.
Contributing: Dave McKinney