As the campaign season heats up, hedge fund managers who wish to engage in the political process are confronted with a conundrum.  On one hand, the Securities and Exchange Commission (SEC) and individual states, municipalities and public pension funds have enacted a variety of pay-to-play regulations designed to limit political involvement by investment advisers who manage money on behalf of public pension funds.  The penalties for even a minor violation of these rules can be severe.  On the other hand, last year’s Supreme Court decision in Citizens United v. Federal Election Commission reaffirmed the right of corporations, unions and individuals to make independent expenditures in connection with federal elections as protected free speech under the First Amendment.  The result is a confusing duality where political “contributions” may be regulated on pay-to-play grounds yet independent “expenditures” are permitted as free speech.  Adding to the complexity is the variety of entities and organizations that now engage in the political process.  These entities may allow donors to participate in the political process more efficiently and effectively.  However, the variety of organizations creates challenges when combined with complex, broadly drafted statutes in overlapping jurisdictions.  Moreover, several entities may contribute money to candidates and parties at multiple levels of government, increasing the risk of an inadvertent violation of pay-to-play statutes.  In a guest article, Scott E. Gluck, Of Counsel at Venable LLP, brings much-needed clarity to the complex issue of pay-to-play compliance by hedge fund managers.  Gluck starts with a review of the SEC’s pay-to-play rule, then continues with a detailed discussion of specific policies, procedures, practices and precautions that hedge fund managers should undertake to avoid pay-to-play or similar violations.