The Securities and Exchange Commission has proposed rescinding its investment-adviser “pay-to-play” rule, a long-standing restriction that bars advisers from receiving compensation for advisory services from certain government clients for two years after making covered political contributions. If adopted, the change would mark a significant shift in how the agency regulates the intersection of campaign activity and public-sector investment business.

The existing rule has been a major compliance fixture for registered investment advisers, particularly those seeking or maintaining mandates from public pension plans, state treasurers, and other government entities.