TEXT OF STORY

Bill Radke: The Securities and Exchange Commission is really hearing it from investment advisers. The SEC is considering prohibiting advisers from making political contributions to win state business. Marketplace’s Nancy Marshall Genzer has our story.

Nancy Marshall Genzer: The SEC wants to stop what’s known as pay to play. Say I’m a financial adviser. I want to be hired to advise a state pension fund. I make a contribution to a politician in charge of awarding state contracts, and presto: I’m hired.

Lynn Turner: Advisers are hired because they’re favorites or political friends — the exact reasons you probably shouldn’t be hiring one of these advisers.

That’s Lynn Turner. He’s a former chief accountant at the SEC. He likes the proposed rules. They would prohibit investment advisers from working for state and local officials for two years if they made contributions of $250 or more.

And the SEC would bar advisers from hiring third parties to try to drum up business. The agency is getting lots of comments on that. Small investment advisers say they need help marketing themselves.

David Ruder says they have a point. He was chair of the SEC from 1987 to 89:

David Ruder: The small investment advisers don’t have the ability to market themselves the way the large investment advisers can.

The SEC commissioners will have the last word. They’re expected to vote on a final rule early next year.

In Washington, I’m Nancy Marshall Genzer for Marketplace.