On September 3, 2026, the SEC proposed eliminating its investment adviser pay-to-play rule, Rule 206(4)-5, along with the related recordkeeping requirements. If finalized, the proposal would remove a compliance regime that can impose a two-year compensation ban for even relatively minor political contributions and has long presented advisers with complex questions about covered employees, government officials, placement agents, and public pension investments.

But rescission would not mean the end of pay-to-play risk. The SEC emphasizes that improper efforts to influence government investment decisions could still implicate the Advisers Act’s antifraud provisions and fiduciary duties, while state and local pay-to-play and procurement laws, federal bribery statutes, public pension rules, and parallel MSRB and FINRA requirements would remain. The proposal also raises important questions for exempt reporting advisers, foreign private advisers, and firms that have embedded Rule 206(4)-5 requirements into contracts and compliance programs.

Our latest blog post examines the SEC’s rationale for the proposed rescission, what would—and would not—change for advisers, and the practical compliance and enforcement implications if the proposal becomes final. Click here to read the full article.