SEC Proposes Ending Ban on Political Donations by Advisers

The United States Securities and Exchange Commission proposed a rule on Thursday to eliminate a 2010 prohibition that prevents investment advisers from offering services to public pension funds if they made recent political donations to state and local officials. Under the current regulation, firms are barred for two years if certain employees contribute between $150 and $350 per election.

SEC Chairman Paul Atkins argued that the existing rule has effectively suppressed political speech. He stated that matters involving political contributions are more properly governed by local ordinances, state laws, and federal election regulations rather than the agency. Commissioner Hester Peirce previously characterized the rule as an exceedingly blunt instrument.

The agency clarified that fraud prohibitions and fiduciary duty requirements will remain in effect despite the proposed change. The proposal now enters a public feedback process, with a final vote required before implementation. This regulatory process typically takes between 18 and 24 months.