On September 3, 2026, the Securities and Exchange Commission (“SEC” or “the Commission”) proposed to rescind Rule 206(4)-5 under the Investment Advisers Act of 1940—the federal “pay-to-play” rule for investment advisers (the “Rule”)—in its entirety and eliminate associated recordkeeping requirements.1 The proposal responds to long-standing concerns that the Rule is overly prescriptive, difficult to administer, and capable of imposing severe consequences for political contributions that bear little or no relationship to an effort to improperly obtain public investment pool business.2
The release of the SEC’s proposal is just the first step in a potentially lengthy rescission process. The Rule remains in force unless and until the SEC adopts a final rescission and that action becomes effective. The SEC must first complete a 60-day public comment…
