On September 3, 2026, the SEC issued a proposal (Proposal) to rescind Rule 206(4)‑5 under the Investment Advisers Act of 1940 (Advisers Act), commonly known as the Pay to Play Rule (Rule), in its entirety and to amend related recordkeeping requirements. In its proposing release, the Commission acknowledged that the Rule has had unintended effects – e.g., penalizing of investment advisers for “foot faults” in the form of tiny political donations at the state and local levels – and that compliance with a strict liability standard has been highly burdensome for investment advisers. Comments on the Proposal are open until November 3, 2026. Many in the private funds industry welcome the move as the latest coup in the current SEC leadership’s deregulation campaign, and as a step back from de facto election oversight. It is important not to overreact, however, given that the Proposal would not change anti-fraud provisions under other sections of the Advisers Act or pay to play restrictions under various other regulatory frameworks, some of which closely follow the SEC’s version. This article summarizes the Rule, explains the Proposal, outlines the agency’s rationale for rescinding the Rule, considers the likely consequences of the Rule’s rescission and offers practical takeaways for fund managers. For analysis of other SEC rulemaking, see “Proposed Form PF Amendments Significantly Reduce Reporting Requirements on Fund Managers (Part One of Two)” (Jun. 11, 2026); and “SEC Proposes Amendments to Small Entity Definitions for Investment Advisers” (Feb. 19, 2026).