Political Contributions (Pay-to-Play)
Contributions to officials can bar an adviser from paid government work for two years.
What is Political Contributions (Pay-to-Play)?
Under the SEC's pay-to-play rule, if an adviser or a covered associate contributes to an official of a government entity who can influence the hiring of advisers, the adviser cannot receive compensation for advising that entity for two years. De minimis contributions are allowed: up to $350 per election to a candidate the person can vote for, and $150 to one they cannot.
Political Contributions (Pay-to-Play): a worked example
A partner's $1,000 donation to a governor who appoints the pension board triggers a two-year time-out from that state pension.
More terms in Ethics & Fiduciary Obligations
Form ADV Part 2 Brochure Delivery
Deliver 48 hours before the contract, or at signing with a 5-business-day exit.
Advisory Contract Requirements
Written, specific about fees, no assignment without consent, no waiver of rights.
Assignment of an Advisory Contract
Transferring a client contract requires the client's consent - including by change of control.
Performance-Based Fees & Qualified Clients
Allowed only for qualified clients: $1.4M with the adviser or $2.7M net worth (from June 29, 2026).
Prepaid Fees & Financial Requirements
Prepayment over $500, six months ahead, triggers net worth and balance sheet rules.
Custody
Holding, or having authority to obtain, client funds or securities.
Discretionary Authority
Deciding the asset, the amount, or buy versus sell - without asking first.
Third-Party Trading Authorization
Anyone other than the owner needs written authority to trade the account.