IAA Supports SEC Proposal to Rescind Pay to Play Rule
November 9, 2026
Contact: IAA VP of Communications & Marketing Janay Rickwalder
The Investment Adviser Association (IAA) has submitted a comment letter strongly supporting the Securities and Exchange Commission’s proposal to rescind its Pay to Play Rule. The IAA commends the Commission for reconsidering a rule that has imposed severe penalties for minor, inadvertent violations and significant compliance burdens on investment advisers, their personnel, and government clients.
“For more than two decades, the IAA has advocated for meaningful and proportionate protections against improper pay to play conduct,” said Karen Barr, President & CEO of the IAA. “We welcome the SEC’s willingness to reconsider a rule that can impose severe consequences for very modest or even inadvertent political contributions, regardless of whether there was any attempt to improperly influence government business.”
The SEC’s Pay to Play Rule generally prohibits investment advisers from receiving compensation for providing advisory services to government entities for two years following certain political contributions by an adviser or certain of its personnel. The IAA’s letter highlights how the rule’s overbroad requirements can create significant compliance burdens, complicate hiring and promotion decisions, discourage lawful political participation, and negatively affect existing advisory relationships.
Importantly, rescission would not leave pay to play misconduct unregulated. Advisers would remain subject to federal, state, and local anti-corruption, campaign-finance, ethics, and procurement laws. Advisers also remain subject to their fiduciary and antifraud obligations under the Investment Advisers Act, as well as compliance program and code of ethics requirements. Government entities and public pension plans have their own safeguards against improper influence, including restrictions on political contributions and government contracting.
“The IAA strongly opposes pay to play practices and supports meaningful protections against improper political influence,” Barr said. “But this prescriptive rule is not the right way to address the problem. Rescinding it would leave in place numerous other protections against misconduct while allowing advisers to maintain compliance programs appropriate to their businesses and the risks they face. We urge the SEC to move forward with its proposal.”
About the Investment Adviser Association
The Investment Adviser Association is the leading organization dedicated to advancing the interests of fiduciary investment advisers. For nearly 90 years, the IAA has advocated for advisers before Congress and regulators, promoted best practices, and provided education and resources to help advisers serve their clients, the capital markets, and the U.S. economy.
