SEC proposes revoking pay-to-play ban on private equity pension investments

In a quiet filing, the Securities and Exchange Commission proposed revoking the “pay-to-play” provision that prevents private-equity and other investment advisers from managing public-sector pension assets for two years after donating to officials who oversee those funds. The rule, adopted nearly two decades ago following high-profile scandals where firms such as Apollo Management, Carlyle and Quadrangle allegedly paid millions to secure billions in pension investments, was designed to stop advisers from being chosen on the basis of political contributions.

If repealed, firms could again seek direct access to roughly $9 trillion in public pensions, raising concerns after recent misconduct cases in Ohio’s teachers’ fund and Iowa’s largest pension plan. The agency will accept public comments for 60 days and argues that existing Investment Advisers Act rules are sufficient, though enforcement of those rules has sharply declined, with only seven related cases in 2025 versus 97 in 2016. Stakeholders warn the change could jeopardize retirees’ savings and revive pay-to-play practices.