SEC proposes scrapping the rule that limits political donations by money managers
Sept. 3, 2026 — The SEC has proposed eliminating its 2010 "pay-to-play" rule, which bars investment advisers from being paid to manage a state or local government's money, such as a public pension fund, for two years after the firm or certain employees donate to an official who helps choose advisers. The rule followed pension scandals in several states, including New York.
The SEC says the rule has worked like strict liability: a contribution of little more than $150 can trigger the ban, the limits have not been updated since 2010, and many firms responded by barring employees' political giving altogether. It would rely instead on advisers' existing antifraud, fiduciary and compliance duties. Commissioner Hester Peirce said she was "thrilled" to eliminate the rule.
Better Markets, an investor advocacy group, said the rule keeps advisers from using political contributions to win public pension business and criticized the proposal. State and local pay-to-play laws, and contract terms at many large pension plans, would still apply, law firms note.
Comments are due Nov. 9, 60 days after the proposal's Sept. 10 publication in the Federal Register.
The wall: Whether the SEC adopts the rescission, and in what form, will not be known until after the comment period closes.
Tier: Confirmed (key facts read in primary at passage level or better)
Sources
- SEC press release 2026-85
- SEC proposing release IA-6994 (Federal Register version)
- Commissioner Peirce statement
- Simpson Thacher (2009 history)
- Latham & Watkins (state rules, pension contracts)
- Better Markets statement
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