SEC Wants to Scrap Its Pension Pay-to-Play Rule

Chairman Paul Atkins has proposed ending a 2010 rule that limits political donations by money managers who seek public pension business; comments are due Nov. 9.

By Richthrax · Oct. 25, 2026

The Securities and Exchange Commission has proposed repealing a 2010 rule meant to keep investment managers from buying their way into managing public pension money with campaign contributions.

The rule bars investment advisers from collecting fees for managing a state or local government's money for two years after the adviser or certain employees make political contributions to officials who oversee those funds, according to the law firm Holland & Knight. It also limits fundraising by advisers and restricts the use of some placement agents to win government clients.

The SEC announced the proposal Sept. 3, and it was published in the Federal Register on Sept. 10, Holland & Knight reported. Public comments are due Nov. 9.

The repeal would also end limits on political contributions and record-keeping requirements for advisers' political giving, The Philadelphia Inquirer reported Oct. 5. The commission currently has two sitting members, with three seats vacant, the Inquirer reported.

Atkins: 'Not the nation's elections regulator'

SEC Chairman Paul Atkins has argued the rule goes too far. "After more than 15 years of experience administering the 'pay-to-play' rule, it is clear that it is overly prescriptive," Atkins said, according to InvestmentNews.

"Ultimately, matters involving political contributions are more properly governed by local ordinances, state laws," he said, as quoted by InvestmentNews. The Inquirer reported Atkins also said, "The SEC is not the nation's elections regulator," and that the rule "resulted in the suppression of free speech."

InvestmentNews reported that Atkins points to existing protections that would remain in force, including antifraud rules, fiduciary duties and compliance requirements. Holland & Knight reported that the SEC is also relying on separate rules from the Municipal Securities Rulemaking Board and FINRA that restrict political contributions.

Pension scandals behind the rule

The Inquirer noted that Pennsylvania is home to nearly one-third of the nation's 5,000 public pension funds and has a history of pay-to-play scandals. Former Pennsylvania Treasurer Rob McCord pleaded guilty in 2015 to criminal violations tied to campaign contributions from money managers, the newspaper reported. In 2010, California pension chief Fred Buenrostro and New York State Comptroller Alan Hevesi were convicted of corruption.

Critics quoted by the Inquirer oppose a full repeal. Christopher Tobe, a former Kentucky pension trustee, called the rule "an objective, preventive restraint," contrasting it with enforcement that comes "after misconduct and harm have occurred."

Richard Vague, chair of the board of Pennsylvania's Public School Employees' Retirement System, supports easing some details but said "an outright rescinding goes far beyond," according to the Inquirer.

"Protective regulations, laws, and other safeguards get put in place in the aftermath of a major crisis," Vague said. He added that "those safeguards largely disappear," and "That makes a subsequent crisis all the more likely."

Michael DiPiano, founder of NewSpring Capital in Radnor, Pennsylvania, told the Inquirer, "I thought the rule had it right."