WASHINGTON, D.C.— Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with the Securities and Exchange Commission (SEC) proposing to rescind the rule that prevents investment advisers from using political contributions to ensure their selection as advisers to public pension funds: 

“SEC Chair Paul Atkins has yet to meet a rule he does not want to rescind. Back in June, he inexplicably proposed to rescind a rule that ensures investors receive the best prices on their securities trades. Now, he has the SEC proposing to rescind a rule that prevents so-called ‘pay-to-play’ practices by investment advisers, where advisers make political contributions to government officials in the hopes that those officials will select them for the lucrative assignment of managing public pension funds and other government assets. 

“The SEC had excellent reasons for adopting this rule in 2010, and there are no reasons for the SEC to rescind it now. In 2010, the SEC adopted the pay-to-play rule because political contributions to officials responsible for selecting the investment advisers to manage public pension funds ‘distort the process by which advisers are selected.’ The SEC recognized:  

• Elected officials who allow political contributions to influence the selection of advisers and use their position to reward contributors ‘violate the public trust.’  

• Investment advisers that seek to influence government officials’ selection of advisers by making or soliciting political contributions to those officials ‘compromise their fiduciary duties to the pension plans they advise and defraud prospective clients.’  

• Pay-to-play practices harm pension plans that may receive inferior advisory services and pay higher fees, and ultimately the millions of retirees who rely on the plan or the taxpayers of the State and municipal governments that must honor those obligations. 

“Chair Atkins says the SEC is proposing to rescind the rule because it ‘has effectively resulted in the suppression of political speech.’ Not so. It has resulted in the suppression of corruption. The rule was intended to, and does, ‘combat pay to play arrangements in which advisers are chosen based on their campaign contributions to political officials rather than on merit.’ Chair Atkins apparently believes that such arrangements should be promoted.”  

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.