The Securities and Exchange Commission issued a proposal to rescind its “pay-to-play” rule that prohibits investment advisers from making certain political contributions.
“The Commission has determined that the political contribution rule, since its adoption in 2010, has led to significant unintended consequences, such as prohibitions by some advisers on political contributions at the state and local level. Advisers have indicated that the rule is operationally challenging to implement, and creates a de facto strict liability standard, which can lead to situations where small donations or “foot faults” potentially trigger substantial prohibitions and fines.”
I could not be happier.
This rule takes a disproportionate amount of time and energy for political contributions that have no connection to fraud or fundraising. A contribution of as little as $151 can result in millions of dollars in lost fees. It is difficult to identify “officials” that are subject to the existing rule because it applies to direct and indirect control.
The SEC proposal it rescind Rule 206(4)-5 in its entirety.
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