The SEC’s first year under Chair Paul Atkins, who was sworn in on April 21, 2025, has offered significant insight into the evolution of enforcement priorities, particularly for private fund managers. Following the more aggressive posture under former Chair Gary Gensler, the Commission has recalibrated its approach, yielding a more selective, resource-conscious enforcement program that places renewed emphasis on traditional fraud, clearer statutory grounding, and demonstrable investor harm.
The SEC’s recent settlement involving a “pay-to-play” rule violation by a private equity firm is a timely reminder for fund managers, especially with the November elections approaching.
As a refresher, Rule 206(4)-5 of the Investment Advisers Act – known as the “pay to play” rule – prohibits investment advisers from receiving compensation for providing advisory services to state and municipal entities for two years after the adviser or one of its “covered associates” makes certain political contribution to candidates for public office. Note that the SEC Enforcement Division staff periodically reviews public campaign contribution reports (which are publicly available online) to identify donations by individuals associated with investment advisers.