SEC proposes rescinding adviser pay-to-play rule

By Atlas Watchline Staff · Regulatory · September 3, 2026

The SEC has proposed rescinding its adviser pay-to-play rule while keeping other Advisers Act fraud, fiduciary, compliance and ethics requirements in place.

The Securities and Exchange Commission said it has proposed rescinding its pay-to-play rule for investment advisers, which bars advisers from providing compensated investment advisory services to a government client for two years after certain political contributions.

The proposal would keep other Advisers Act obligations in place, including prohibitions on fraud, fiduciary duty requirements, the compliance rule and the code of ethics rule, the SEC said.

The agency said the political contribution rule, adopted in 2010, has had unintended consequences. In the SEC's view, some advisers have banned political contributions at the state and local level, faced operational challenges in implementing the rule and encountered a de facto strict liability standard that can trigger penalties over small donations or "foot faults."

SEC Chairman Paul S. Atkins said in a statement that after more than 15 years of administering the rule, it is "overly prescriptive" and has produced a host of unintended consequences. Atkins said the rule has imposed serious penalties for small donations, punished firms for employee donations made before joining the business and effectively suppressed political speech.

Atkins also said matters involving political contributions are more properly governed by local ordinances, state laws and federal election regulations.

The proposal would rescind Advisers Act Rule 206(4)-5 and amend the Advisers Act recordkeeping rule to remove provisions tied to the political contribution rule, according to the SEC.

The commission said the public comment period will remain open for 60 days after the proposing release is published in the Federal Register. The SEC said other Advisers Act requirements would continue to apply during that period.

Sources

• SEC press release

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