AO 2017-08: Investment firm may offer ETF that reflects partisan support
Point Bridge Capital, LLC (PBC), may offer an index and exchange traded fund (ETF) of publicly traded securities that reflects the political contributions and expenditures made by companies’ separate segregated funds (SSFs) and employees.
Background
PBC’s index scores each company based on the contributions and expenditures its SSF and employees make to a particular political party, that party’s candidates and any associated leadership PACs. Using the index, PBC plans to offer an ETF that tracks the performance of companies included in the index, allowing investors to invest in the stocks of companies whose employees and SSFs demonstrate a certain level of support for a particular political party and its candidates.
PBC will obtain the aggregated contribution data from publicly available reports filed with the FEC, as well as from other aggregators of Commission data. PBC will not provide any individual contributor’s contact information in creating or marketing its ETF or index, and will not use that information to solicit contributions. PBC will not provide that information to third parties for such use, and will not license or distribute any data identifying individual contributors.
PBC asks if it may create this index and publicly discuss and report factual data on the aggregated political contributions of these companies. Furthermore, PBC asks if it may license the index so that other entities may create baskets of securities for investment purposes. PBC plans to charge its standard advisory and other fees on the ETF. Finally, PBC asks if it may advertise the existence of the index and ETF without having to file reports with the Commission. The ads will neither expressly advocate nor be coordinated with any candidate or party, and will not constitute electioneering communications.
Analysis
PBC may create an index and ETF based on companies’ aggregated political contributions and publicly discuss the factual data regarding those contributions. PBC may also license this index to others for the creation of baskets of securities for investment purposes, and may charge fees relating to the ETF.
Since the aggregated data PBC intends to use does not contain individual contributors’ contact information, its activities do not implicate the privacy concerns expressed in the sale or use restrictions at 52 U.S.C. § 30111(a)(4). The Commission has repeatedly approved the use of non-individualized contribution data obtained from reports filed with the Commission, both for display to users and for internal analysis, so long as the data is neither used to solicit contributions nor so used by third parties to whom that data is provided.
Finally, PBC may advertise the existence of the index and the ETF, and will not be required to file any reports with the Commission, because the ads and other activities will not constitute independent expenditures, coordinated communications, or electioneering communications. Although PBC will identify a particular political party in its advertisements, it will neither mention nor identify individual candidates, and will not expressly advocate for any candidate or political party.
Date issued: 8/17/2017; Length: 7 pages
Citations:
Statute:
- 52 U.S.C. § 30111(a)(4)
Sale or use restriction
Advisory opinions:
- AO 2015-12
Use of FEC contributor information in mobile application - AO 2014-07
Use of web platform to make contributions to federal candidates - AO 2013-16
Organization's use of FEC contributor information
Resources: