WASHINGTON — Former Southwest Securities Inc. banker John F. Kendrick has agreed to pay a civil penalty of $10,000 to settle Securities and Exchange Commission charges that he willfully violated, and caused the firm to violate, Rule G-37 by making significant political contributions to Massachusetts Treasurer Timothy Cahill.
The SEC announced the settlement yesterday, under which it also ordered Kendrick, a resident of Medfield, Mass., to cease and desist from any other further violations of the rule. The commission said the civil penalty was small because Kendrick provided a sworn statement of his financial condition and other evidence asserting his inability to pay more.
The Municipal Securities Rulemaking Board’s Rule G-37 bans firms from engaging with issuers for two years if they or their municipal finance professionals make significant contributions to issuer officials who can influence the award of muni business. However, a de minimis provision of the rule permits MFPs to contribute up to $250 to anyone for whom they can vote.
Kendrick, who neither admitted nor denied the SEC charges, was a senior vice president of public finance for New England and a municipal finance professional in the Medfield branch office of Southwest between Dec. 1, 2000, and July 2009, according to the SEC. Southwest Securities is based in Dallas.
The SEC found that he contributed $1,625 to Cahill between 2003 and 2008. The contributions were made through seven different checks he sent to Cahill’s campaign during two election cycles. Cahill is responsible for appointing individuals who help select underwriters for the state and its authorities.
Specifically Kendrick sent three personal checks, each totaling $250, to Cahill on Feb. 8, 2003, March 24, 2004, and June 22, 2005, before the state’s 2006 primary election. He then contributed another $875 through four personal checks before the state’s 2010 primary election.
In addition, Kendrick made about 82 solicitations for campaign contributions to Cahill while serving as co-host of a fundraiser for the treasurer in June 2005. The fundraiser netted about $9,000 for Cahill’s campaign committee. As a result, Kendrick violated a provision of Rule G-37 that does not permit muni finance professionals to solicit contributions for officials of an issuer with which their firm is doing business, the SEC said.
His actions also caused Southwest to violate the rule by serving as co-manager for a total of 19 negotiated underwritings for the state or its authorities totaling about $14 billion within the two-year period when the contributions were made, the commission said.
Kendrick could not be reached for comment.
