SEC Proposes Easing Pay-to-Play Rule Restrictions

The Securities and Exchange Commission (SEC) has proposed a major overhaul of Wall Street's pay-to-play rule, which punishes investment advisers for making political donations.

The current rule, adopted in 2010 under the Investment Advisers Act, imposes a two-year ban on compensation for any adviser who contributes to certain political officials and then tries to manage state or local government assets.

This includes public pension funds, where even a single employee donation can trigger the full penalty. SEC Chairman Paul Atkins described the existing framework as a 'trap for the unwary' during a SIFMA conference in March 2026.

The proposal seeks to modify the compensation restrictions and reduce one of the more anxiety-inducing compliance obligations in the industry.