SEC Proposes to Rescind Rule on Political Contributions Made by Certain Investment Advisers

The SEC has released a proposed rule that would rescind Rule 206(4)-5 under the Investment Advisers Act of 1940, which “prohibits investment advisers from providing investment advisory services for compensation to a government client for two years after an adviser or any covered associate of the adviser makes a contribution to certain categories of elected officials or candidates.” The SEC’s decision to rescind the rule is based on feedback from market participants indicating that it has resulted in a range of “significant unintended consequences” and that it is “burdensome, complex, and both lacks clarity and creates a de facto strict liability standard.”

For more information, see the press release and fact sheet — as well as the statements by SEC Chairman Paul Atkins and SEC Commissioners Hester Peirce and Mark Uyeda — on the SEC’s Web site.