US SEC proposes scrapping 'pay to play' rule for pension fund advisers
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The proposed regulation will be subject to a 60-day period of public comment prior to any decision on whether to modify and adopt it.
SEC proposes ending pay-to-play restrictions
Sept. 3 (Reuters) - Wall Street's top regulator on Thursday proposed doing away with "pay-to-play" regulations intended to prevent investment advisers from winning business from public pension funds by making political contributions.
Under a proposed change unveiled on Thursday, the agency would scrap regulations that bar investment advisers from providing paid services to government clients for two years after making campaign donations to certain elected officials, the U.S. Securities and Exchange Commission said in a statement.
Other provisions related to fraud, fiduciary duties and ethics would remain in place, it said.
Atkins says rule has had unintended consequences
"After more than 15 years of experience administering the ‘pay-to-play’ rule, it is clear that it is overly prescriptive and has produced a host of unintended consequences," SEC Chair Paul Atkins said in a statement, citing what he said had been "serious penalties" for small, spur-of-the-moment donations.
"Furthermore, advisers’ implementation of the rule has effectively resulted in the suppression of political speech."
The SEC first adopted the rule in 2010 in an effort to prevent quid-pro-quo donations from investment advisers seeking to manage the tremendous assets of pension plans and other government investment accounts.
Officials said at the time this meant public employee retirement savings were vulnerable to fraud and the selection of fund managers based on donations rather than merit.
