Abbott got more than $200,000 in donations that may conflict with SEC “pay to play” rules

greg abbott

Since 2010, it has been illegal under federal securities policy for investment companies to use campaign donations to curry favor with the politicians who oversee investment decisions on public funds.

But records show that Texas Gov. Greg Abbott, freshly elected this week to a second term, benefitted from more than $200,000 in donations that may have broken that rule.

Campaign finance records show that John Walker, CEO of the investment firm EnerVest, has been donating to Abbott since 2010. In 2015, EnerVest began managing $7.5 million in funds from the University of Houston.

Abbott doesn’t have anything to do directly with decisions on how that fund is managed. But he appointed seven of the 10 people who do — the U of H board of regents.

SEC rules prohibit investment companies from donating to public officials while handling investments for agencies those politicians administer. It’s called “pay to play.”

EnerVest is a private equity firm that invests in gas and oil exploration. It has thrived thanks to injections of millions of dollars from institutional investors, including the Houston Municipal Employees Pension. But those investments haven’t always proved particularly profitable for the institutions.

EnerVest’s donations to Abbott appear to fit the SEC’s description of “pay to play,” said Chris Tobe, a former Kentucky Retirement Systems trustee.

“The governors really control these pension funds through appointments,” Tobe said. “No one who works at the agencies wants to piss the governor off, so this goes unreported. What you would need is an auditor who is willing to go to war with the governor.”

The most recent contribution from Walker was $5,000 in April to Abbott’s re-election campaign.

In all, Walker has given $203,500 to Abbott campaigns, state campaign finance records show, including $100,000 since 2012. The largest donation, $50,000 came in June 2014, about a year before U of H voted to invest the $7.5 million with EnerVest.

The investment was approved by the university’s endowment management committee in May 2015. Regent Jarvis Hollingsworth said the investment did not require the approval of the full board.

The donations from Walker to Abbott were first reported by The Young Turks, a progressive news and commentary program that airs on YouTube and on a related web network.

EnerVest offers a series of investment funds with varying degrees of risk. One of its funds went bust last year after incurring losses due to the drop in oil prices, and several public investors incurred heavy losses. The Orange County (Calif.) Employees Retirement System wrote down its entire investment. The UH investment with EnerVest fared better, according to the most recent financial documents, although it showed a rate of return of only about 2.9 percent. The university’s endowment fund overall achieved a 16.06 rate of return in 2017.

The SEC’s rule against pay-to-play has been difficult to enforce, requiring the gleaning of information from thousands of pages of campaign financial reports from thousands of politicians around the country.  Some of Abbott’s campaign forms, for instance, run to more than 5,000 pages.

The result, according to SEC documents, is that pay to play has continued to flourish.

Texas has no version of the federal pay to play rule. The governor has the largest state appointment power, with the speaker of the house and lieutenant governor also empowered to make some appointments.

The Houston-based financial firm EnCap was fined $500,000 in July by the Securities and Exchange Commission for political contributions to Abbott in 2013 and 2014. Abbott, who in 2014 was the attorney general of Texas, was not named in the SEC’s cease-and-desist order, which referred to an “attorney general candidate.”

Records show Abbott’s opponent in the governor’s race, Wendy Davis, received no EnCap contributions.

Abbott’s office did not respond to an interview request for this story.  On Tuesday he defeated former Dallas County Sheriff Lupe Valdez with 56 percent of the vote to win his second term. He ended the campaign with $19 million in his coffers to Valdez’ $60,000.

Former State Rep. Lon Burnam (D-Fort Worth), who was a member of the House Investments & Financial Services committee, said that donations like EnerVest’s often are hidden in the records of political action committees. The fact that they were listed directly on Abbott’s campaign finance reports was most likely “a mistake,” Burnam said.

In putting the “pay to play” rule into effect in 2010, SEC Chairman Mary Schapiro said that “Pay to play can also favor large advisers over smaller competitors, reward political connections rather than management skill, and – as a number of recent enforcement cases have shown – pave the way to outright fraud and corruption.”

Schapiro, now a member of a private firm that advises clients on financial regulations, did not return a call seeking comment.

While there has been no move to use the SEC rule as the basis for a similar statute in Texas, a bill introduced in the Texas Legislature in 2017 sought to make campaign donors ineligible for gubernatorial appointments and limit how much an appointee can contribute after accepting a position.

The measure was authored by state Rep. Lyle Larson (R-San Antonio), who accused Abbott of using his appointment authority to secure political donations.

“If you want to be appointed to the board of regents at A&M, or UT, or Texas Tech, or any other meaningful board or commission, then you’re going to have to pay some money,” Larson said in introducing his bill. “You’re going to pay it through a campaign. And I think that at this point time, we need to stop that practice. “

The measure cleared the House with a 91-48 vote but died in the Senate. In the special session that followed, Larson claimed that Abbott vetoed unrelated bills authored by Larson as retribution for him filing the appointments bill.

Steve Miller can be reached at [email protected].


  1. This is why so many pension funds are going broke and taxpayers are having to pay more to fund the pensions. It is just a money scheme for politicians and the rich. It is time everyone joined social security and have a separate personal investment account, no pension funds that can take dues and invest in anything while funneling money to politicians.


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