[Photo by Leonard J. DeFrancisci / Wikimedia Commons]

In 2013, Paul Hilal, then a Pershing Square analyst, contributed $500 to the campaign of a family friend, Juliette Kayyem, who was trying to mount a run for governor in Massachusetts. That was in excess of the $150 people are allowed to give to candidates they cannot vote for.

While Kayyem did not gain enough votes to make it onto the ballot in 2014, the state's governor is permitted to appoint members of the state pension fund's board who could vote on which firms should manage the fund's money.

Now, William Ackman’s Pershing Square Capital Management, is at risk of having to return millions in fees it earned from managing money for the Massachusetts state pension fund, should it be determined that the fund violated campaign finance rules. It's unclear precisely how much in fees is at stake, but based on how much the New York-based firm manages for the state, it could be in the millions. If the firm were forced to pay back any fees, they would go to the SEC, not the pension fund.

It’s now been made public that Pershing Square Capital Management applied to the SEC for an exemption from the fees. Pershing Square sent its application to the SEC in September, months after the regulator in May asked for information about campaign donations. In a statement on Tuesday, Pershing Square called the improper donation "an unintended violation," and said it takes compliance very seriously.

"A former employee made a $500 campaign contribution to his friend's sister's unsuccessful primary campaign in an unintended violation of our compliance policies," Pershing said in its statement. "The donation was $350 in excess of the allowable contribution. The donation has since been returned."

Pershing Square is one of 28 hedge funds that manage money for Massachusetts' $63.2 billion state pension fund and started investing on the state's behalf in 2011.