Regulatory & Compliance | 09.03.26

SEC Proposes Scrapping Pay To Play Rule for Pension Fund Advisors

by: David Ljunggren; Douglas Gillison

The U.S. Securities and Exchange Commission (SEC) proposed eliminating its “pay-to-play” rule, which currently restricts investment advisors from receiving compensation from public pension funds for two years after making certain political contributions. The rule, adopted in 2010, was designed to prevent advisors from using campaign donations to improperly win government investment-management contracts and protect public retirement assets from politically driven fund-manager selection. SEC Chair Paul Atkins said the regulation has become overly prescriptive and has produced unintended consequences, including severe penalties for small or inadvertent political donations. He also argued that compliance requirements have effectively restricted political speech. The proposal would remove the two-year ban while retaining other safeguards concerning fraud, fiduciary responsibilities and ethics. The proposal will undergo a 60-day public comment period before the agency decides whether to adopt the changes.

Read the full article on Reuters