SEC proposes scrapping its pay-to-play rule for investment advisers

The SEC has opened a consultation to rescind the pay-to-play rule that bars advisers from taking fees from government clients for two years after a covered political contribution, along with its recordkeeping provisions. For compliance teams that have built contribution pre-clearance programmes since 2010, this reopens a long-settled constraint. Comment runs 60 days after Federal Register publication.

• The proposal would rescind Advisers Act Rule 206(4)-5 and strike the corresponding provisions from the Advisers Act recordkeeping rule.
• The rule currently bars advisers from compensated advisory services to a government client for two years after a covered political contribution.
• Antifraud prohibitions, fiduciary duty requirements, the compliance rule and the code of ethics rule would all remain in force.
• The Commission cites a de facto strict liability standard under which small donations or 'foot faults' can trigger substantial prohibitions and fines.
• The public comment period remains open for 60 days after the proposing release is published in the Federal Register.

Executive summary

The Securities and Exchange Commission issued a proposal on September 3, 2026 to rescind its pay-to-play rule for investment advisers and the associated recordkeeping requirements. Advisers Act Rule 206(4)-5 prohibits an investment adviser from providing compensated investment advisory services to…

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