Washington D.C., Sept. 3, 2026 —
The Securities and Exchange Commission today issued a proposal to rescind its “pay-to-play” rule that prohibits investment advisers from providing compensated investment advisory services to a government client for two years after making a political contribution to certain elected officials or candidates, and related recordkeeping requirements. All other requirements of the Advisers Act and its associated rules, including prohibitions on fraud, fiduciary duty requirements, the compliance rule, and the code of ethics rule, would continue to apply.
The Commission has determined that the political contribution rule, since its adoption in 2010, has led to significant unintended consequences, such as prohibitions by some advisers on political contributions at the state and local level. Advisers have indicated that the rule is operationally challenging to implement, and creates a de facto strict liability standard, which can lead to situations where small donations or “foot faults” potentially trigger substantial prohibitions and fines.
“After more than 15 years of experience administering the ‘pay-to-play’ rule, it is clear that it is overly prescriptive and has produced a host of unintended consequences. Beyond operational implementation challenges, it has imposed serious penalties for small, often impulsive donations to candidates in both parties, and routinely punishes and handicaps advisory firms for an employee making a donation even before joining the business. Furthermore, advisers’ implementation of the rule has effectively resulted in the suppression of political speech,” said SEC Chairman Paul S. Atkins in a statement. “Ultimately, matters involving political contributions are more properly governed by local ordinances, state laws, and federal election regulations—not by the SEC.”
Specifically, the proposal would rescind Advisers Act Rule 206(4)-5 and amend the Advisers Act recordkeeping rule to eliminate the corresponding provisions related to the political contribution rule. The public comment period will remain open for 60 days after the proposing release is published in the Federal Register.
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Last Reviewed or Updated: Sept. 3, 2026
Facts Only
* The Securities and Exchange Commission issued a proposal to rescind its “pay-to-play” rule.
* The rule prohibits investment advisers from providing compensated advisory services to a government client for two years after making political contributions to certain elected officials or candidates, and related recordkeeping requirements.
* Other requirements of the Advisers Act, including prohibitions on fraud, fiduciary duty requirements, the compliance rule, and the code of ethics rule, would continue to apply.
* The Commission determined the political contribution rule led to unintended consequences, such as state and local level prohibitions on political contributions by some advisers.
* Advisers indicated the rule is operationally challenging and creates a de facto strict liability standard regarding small donations.
* SEC Chairman Paul S. Atkins stated that matters involving political contributions are properly governed by local ordinances, state laws, and federal election regulations.
* The proposal would rescind Advisers Act Rule 206(4)-5 and amend the recordkeeping rule concerning the political contribution rule.
* The public comment period will remain open for 60 days after publication in the Federal Register.
Executive Summary
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Sentinel — Human
The text reads like legitimate regulatory reporting framed by expert commentary, indicating a high probability of human authorship focused on policy analysis rather than pure data recitation.