Goldman Sachs (GS) will pay $12 million to settle charges it made undisclosed contributions to a former Massachusetts state treasurer in violation of "pay-to-play" rules.

The case stems from the activities of Neil Morrison, a former vice president in the investment banking giant's Boston office who solicited underwriting business from the commonwealth at roughly the same time he worked on the campaign for Timothy Cahill, the Securities Exchange Commission said Thursday. Cahill served as state treasurer while running for governor in 2010.

"Morrison's work for Cahill's campaign during his Goldman Sachs' work hours was remarkable in its breadth," the SEC wrote in an order that disposes of its case against the bank.

Federal rules bar contributions of cash or services to political campaigns from anyone who may be seeking to influence the award of contracts for underwriting business.

According to the SEC, Morrison raised money, wrote speeches, recruited supporters, approved contracts, arranged advertising, drafted plans, interviewed consultants and conducted other work on behalf of Cahill over a two-year period beginning in November 2008. On at least three occasions, Morrison, who also contributed $400 to Cahill's gubernatorial bid, referenced his work on the campaign in solicitations of securities business from the treasurer's office.

Within two years of Morrison's contributions, Goldman participated in a total of 30 underwritings of municipal securities on behalf of Bay State issuers that netted the company roughly $7.6 million in fees, the SEC charged.

As treasurer, Cahill oversaw the state's water pollution abatement trust, school building authority and other issuers of municipal securities. As a gubernatorial hopeful, he stood to oversee such issuers as the state's housing finance, transportation and water resources authorities.

"Goldman Sachs should have taken additional steps to ensure Morrison's compliance in light of the fact that the firm knew that he had a political background, had a personal relationship with Cahill, and that he had a close relationship with other issuer employees," the SEC added.

Goldman, which has not admitted or denied wrongdoing, will return its profits from the underwritings and pay roughly $3.8 million in penalties. The SEC will continue its case against Morrison, who has not settled.

Neither Goldman Sachs, nor lawyers for Morrison and Cahill, responded immediately to a request for comment. Goldman Sachs terminated Morrison in December 2010, according to the SEC.

In April, officials in Massachusetts indicted Cahill on corruption and fraud charges, to which he pleaded not guilty.