During the Republican primaries, Donald Trump made much of the fact that he was self-funding his campaign and contrasted himself to career politicians with whom he shared the debate stage, even claiming that he had bought the loyalty of a few of them with his own donations. Trump changed his mind when he won the nomination, and he is now trying to catch up to Clinton's fundraising effort. 

Risky Donations

But his decision to add Indiana governor Mike Pence to the ticket will make that harder, as he's made it highly risky for many financial firms to donate to his campaign.

According SEC's pay-to-play rules, which were enacted in 2010 to prevent influence-peddling through campaign donations, asset managers face potentially losing two years' worth of business with the $29.9 billion Indiana public pension fund, and perhaps suffering other penalties. That's even if they donate more than a token amount to the campaign of Indiana Governor Mike Pence, who is the de facto head of the fund.  

Kenneth Gross, a campaign finance expert and partner at Skadden Arps, told OpenSecrets.org in July that the restriction will "cause most of the major players on Wall Street and financial service firms to not contribute and will even prohibit soliciting funds for the campaign." He added, "The implications for any such covered donor could be draconian." (See also, Money and Politics.)

Pay-to-Play Restrictions

Wall Street seems to be taking the warning seriously. In late August, Goldman Sachs Group Inc. (GS) sent an internal email stating that, after September 1, the firm's partners were "prohibited from engaging in political activities and/or making campaign contributions to candidates running for state and local offices, as well as sitting state and local officials running for federal office." The message, first reported by Politico, explained, "The policy change is meant to prevent inadvertently violating pay-to-play rules." (See also, Clinton vs. Trump: How They Match Up as Investors.)

An unnamed source told Bloomberg that Credit Suisse Group AG (CS) employees need approval from the compliance department before donating to the Trump campaign. Similarly, a Northern Trust Corp. (NTRS) internal email alerted employees that Trump campaign donations would violate the pay-to-play rule, which they should avoid. ACA Compliance Group, which works with private fund managers, told clients they should "proceed with the highest level of caution" before donating to Trump's campaign. Spokespersons for Credit Suisse and Northern Trust declined to comment for Bloomberg's story, which was published Thursday. (See also, How Goldman Sachs Makes its Money.)

According to Gross, the pay-to-play rule does not prohibit political action committee (PAC) donations, but "most bankers have stayed away from doing that" because, if regulators find that the campaign and PAC are coordinating, the donations could trigger the penalties. (See also, Donald Trump's Success Story.)

Trump's Campaign Donations 

Trump is also experiencing difficulties with the other side of the pay-to-play rules. Critics allege that he acted improperly when his foundation donated $25,000 to the election committee of Florida attorney general Pam Bondi in 2013. He paid a $2,500 fine because tax-exempt groups are barred from donating to political campaigns, but the issue did not end there. Bondi would later decline to participate in an investigation into Trump University. Her office did not return the donation. (See also, Donald Trump and the Mystery of the Missing Manhattan Sewage.)

Trump has accused Clinton of engaging in rampant pay-for-play through the Clinton Foundation. Trump has called the organization "the most corrupt enterprise in political history." His campaign manager, Kelleyanne Conway, told CNN's Anderson Cooper in late August that Trump was not himself paying to play when he gave between $100,000 and $250,000 to the Clinton Foundation (according to the group's donor list). "No, it seems like he had access to her anytime he wanted. She went to his wedding," Conway said. "No, he was not paying to play." (See also, Top 10 Corporate Contributors to the Clinton Campaign.)