SEC Proposes Easing Pay-to-Play Rules for Investment Advisers

The US Securities and Exchange Commission submitted a proposal to the White House on Wednesday to ease its pay-to-play rule. The current regulation prohibits investment advisers from providing services to state and local public pension funds for two years if certain employees make political donations between $150 and $350 to elected officials per election.

Commission Chairman Paul S. Atkins criticized the existing framework for punishing individuals who may be unaware they are violating the rule. The agency stated that the current regulations create unnecessary compliance burdens and are overly restrictive. These rules were originally implemented to prevent kickback schemes and the use of political contributions to secure pension fund business.

The proposal is currently under review by the Office of Management and Budget. Before the changes can be made public for feedback, they must be approved by the White House and voted on by the commission, a process that typically requires 18 to 24 months.