SEC Proposes to Rescind Investment Adviser Pay-to-Play Rule
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.
Hong Kong SFC Signals Tougher Scrutiny of Legal Privilege Claims
The Hong Kong Securities and Futures Commission (SFC) has signaled that it intends to take a tougher approach to claims of legal professional privilege, particularly where companies assert privilege broadly over internal investigation materials, documents collected during dawn raids, or materials responsive to compulsory regulatory requests.
The warning follows a recent Hong Kong court ruling rejecting privilege claims over an internal investigation report and related materials because their dominant purpose was found to be satisfying regulatory reporting obligations, rather than obtaining legal advice or preparing for litigation. The decision underscores that the involvement of lawyers, confidentiality labels, or even a limited waiver to a regulator does not itself establish privilege.
In this post, our colleagues examine the ruling, the SFC’s stated intention to “push back hard” against over-broad privilege claims, and the practical implications for companies conducting internal investigations and responding to regulatory inquiries. The post also considers how companies can preserve legitimate privilege claims while navigating investigations that may simultaneously involve fact-finding, legal advice, remediation, and regulatory engagement. Click here to read the full post.
