Goldman Sachs’ highest-paid employees— the investment bank’s partners— are not allowed to donate to the Donald Trump/Mike Pence presidential ticket.

On Monday, August 29, the bank sent a memo to its partners announcing a new policy change at the firm. As of September 1, partners are now considered “restricted persons,” meaning they cannot make a donation “to candidates running for state and local offices, as well as sitting state and local officials running for federal office.” The memo specifically used Indiana Governor Mike Pence running as Trump’s vice president as an example of a prohibited contribution.

What the bank is doing is removing itself from any potential conflict of violating pay-to-play rules.

“The policy change is meant to prevent inadvertently violating pay-to-play rules, particularly the look-back provision, when partners transition into roles covered by these rules. The penalties for failing to comply with these rules can be severe and include fines and a ban on the firm from doing business with government clients in a particular jurisdiction for a period of at least two years,” the memo states.

On August 25, just a few days prior to the Goldman memo, the Securities and Exchange Commission said it plans to approve two FINRA proposed rules — rules 2030 and 4580 — that would impose pay-to-play restrictions and record keeping requirements on broker-dealers that solicit business with government entities on behalf of investment advisers. Those rules won’t take effect until sometime in 2017.

The FINRA proposed rules are similar to SEC rule 206(4)-5 that addresses pay-to-play by restricting campaign donations made by hedge funds and private equity firms. That rule, which was approved in 2011, says that fund managers and their employees can’t give money in excess of $250 to $350 to a campaign of a sitting state or local official they might do business with. The rule also applies if that sitting official is running for federal office. Pence is the sitting Indiana governor.

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Specifically, it comes down to pension plans. Hedge funds and private equity funds manage both state and local governments’ public pension plans. If fund managers give more than $250 to the state and local officials that administer those plans, they’re banned from doing business with those plans or even getting compensation from them for two years.

“A political contribution to a government official that would, under the rule, trigger the two-year time out from providing advice for compensation to the government entity would also trigger a two-year time out from the receipt of compensation for the management of those assets though a covered investment pool. This provision extends the protection of the rule to public pension plans that increasingly access the services of investment advisors,” the rule states.

There’s also a “look-back” provision that can be dangerous. An individual who’s donated above the de minimis amount may find it challenging to get a promotion or make a job transfer while that two-year ban is still in effect.

Rule 206(4)-5 is an extension of another rule that’s been around since 1994 — MSRB rule G-37, which bars broker-dealers who give more than $250 to state or local officials from doing business with them for two years. This rule came about because some bankers were making political contributions and then getting business underwriting municipal bonds. What was happening was if a state wanted to build a road, a prison, or a state university, they would finance it with debt. They would need a Wall Street firm to underwrite that business. A lot of the time political contributions granted municipal-bond firms access to that business, so the SEC approved the rule to curb these abuses.

The contents of the Goldman memo were first reported by Politico’s Morning Money.

Here’s the Goldman Sachs full memo:

August 29, 2016

New Policy on US Political Activities by “Restricted Persons”

You are receiving this e-mail because effective Thursday, September 1, all partners across the firm are considered “Restricted Persons” as defined by the firm’s Policy on Personal Political Activities in the US. As outlined below, Restricted Persons are 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 policy change is meant to prevent inadvertently violating pay-to-play rules, particularly the look-back provision, when partners transition into roles covered by these rules. The penalties for failing to comply with these rules can be severe and include fines and a ban on the firm from doing business with government clients in a particular jurisdiction for a period of at least two years.

The policy change is also meant to minimize potential reputational damage caused by any false perception that the firm is attempting to circumvent pay-to-play rules, particularly given partners’ seniority and visibility. All failures to pre-clear political activities as outlined below are taken seriously and violations may result in disciplinary action.

Highlights of the policy as it applies to you as a Restricted Person are as follows:

All Political Activities Require Pre-Clearance

Like all firm personnel, you must pre-clear all political activities through the US Political Contributions Pre-Clearance System. A pre-clearance requirement applies to all contributions and solicitations, as well as to attending or hosting events; lending your name to lists, letters or invitations; serving on committees; and volunteering with campaigns and elections. Each contribution or political activity must be separately approved, even if you have received prior approvals for the same political campaign.

Prohibition on State, Local and Certain Federal Political Activities

As a Restricted Person, you may not make any contributions or solicit in connection with:

Any federal candidate who is a sitting state or local official (e.g., governor running for president or vice president, such as the Trump/Pence ticket, or mayor running for Congress), including their Political Action Committees (PACs).

Any state or local candidate or official in any state or locality (e.g., candidate for governor, mayor, state treasurer, state comptroller, state legislator, local city council).

State and local party committees (e.g., the Democratic Party of Virginia, the Suffolk County Republican Party).

PACs and Super PACs supporting or opposing one or more state or local candidates.

Inaugural/Transition Committees or expenses for newly elected state and local officials.

Bond ballot initiative committees (e.g., a committee seeking authorization to issue municipal securities to fund a public infrastructure project).

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Julia La Roche is a finance reporter at Yahoo Finance.

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