WASHINGTON, D.C.— Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with Better Markets’ comment letter to the Securities and Exchange Commission (“SEC” or “Commission”) related to its proposal 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 is on a rampage to rescind rules that protect investors. That rampage extends so far as proposing to eliminate rules that prevent investment advisers from using political contributions to essentially bribe elected officials to divert lucrative consultant contracts their way. The SEC passed a rule to prevent this practice, known as ‘pay-to-play,’ in 2010, and it is inexplicable that Chair Atkins’s SEC would now attempt to rescind it. 

“As our comment letter shows, the SEC’s reasons for rescinding the rule are unpersuasive: 

• Other laws are not sufficient to prevent pay-to-play practices. If they were, there would have been no need for the SEC to adopt the rule in 2010 following widespread reports of pay-to-play schemes. The fact that the rule was successful in curbing such schemes after its passage shows how foolhardy it would be to rescind the rule now. 

• The rule has not had ‘unintended consequences.’ In 2010, the SEC recognized that the rule would require investment advisers to alter some of their practices to prevent pay-to-play arrangements but determined this was necessary to prevent political contributions from distorting the process by which public pension funds select their advisers. The so-called burdens the SEC now says the rule imposes on investment advisers seem like a small price to pay to prevent government corruption.  

• Chair Atkins is wrong to say that because the rule suppresses political speech, the SEC should rescind it. The courts have already ruled that the rule does not suppress political speech in violation of the First Amendment. Instead, as courts have recognized, it suppresses corruption—a goal that Chair Atkins’s SEC should support. 

“The SEC should withdraw the proposal, so public pension funds that invest for millions of Americans continue to select advisers based on merit rather than campaign contributions.”  

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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.