IAA Welcomes SEC Proposal to Address Pay to Play Rule
September 3, 2026
Contact: IAA VP of Communications & Marketing Janay Rickwalder
The Investment Adviser Association (IAA) today welcomed the Securities and Exchange Commission’s proposal to rescind Rule 206(4)-5 under the Investment Advisers Act of 1940, the Commission’s rule governing political contributions by investment advisers.
The IAA has long advocated for meaningful reform of the pay to play rule and has raised concerns regarding the rule’s significant compliance burdens and disproportionate consequences. The IAA strongly supports appropriate safeguards against improper political influence in the selection of investment advisers by government entities. However, experience with the rule has demonstrated that its broad, prescriptive framework can impose substantial burdens and produce significant consequences even in circumstances presenting no meaningful pay to play risk. And these practices are already prohibited by the antifraud provisions and other existing laws and regulations that provide a robust framework to deter advisers from “buying business.”
“We applaud the Commission for moving forward to address the pay to play rule,” said Karen Barr, President & CEO of the IAA. “We have long raised concerns that the rule imposes severe consequences without regard to whether a political contribution was actually intended to influence the award of advisory business.”
The IAA looks forward to carefully reviewing the Commission’s proposal and engaging constructively with the SEC throughout the rulemaking process.
