On July 3, 2026, the U.S. Securities and Exchange Commission (SEC) released its updated regulatory agenda for 2026. The agenda, which is required to be updated semiannually under the Regulatory Flexibility Act, includes an ambitious 38 items. Notably, as part of this update, the SEC added potentially amending Rule 206(4)-5, the SEC’s “pay-to-play” rule for investment advisers (the Rule).
The Rule prohibits an investment adviser from receiving compensation for managing a government entity’s investments for two years after covered political contributions are made, directly or indirectly, by the adviser, its covered employees or PACs they control to certain state or local candidates or officials. It also includes a ban on soliciting or coordinating contributions for candidates, officials or political parties while the adviser is providing, or seeking to provide, investment advisory services to government entities in that jurisdiction.
The agenda states that the Division of Investment Management is considering recommending that the SEC propose amendments to address “identified compliance burdens,” although it does not specify which aspects of the Rule may be amended.
While the SEC is unlikely to accomplish every item on its agenda, the agenda provides a useful window into the SEC’s priorities, including those of Chairman Paul Atkins. At a conference in March, Chairman Atkins described the Rule as a “trap for the unwary” and stated that “we will be addressing that as well this year.” This may be a sign in that direction.
We are continuing to closely monitor these developments. Please contact us with any questions or for more information about potential regulatory changes to the Rule.
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