SEC Falls to Two Commissioners and Rewrites Its Quorum Rule: What GPs Should Do
With Commissioner Peirce gone on 2 October, the SEC has two of five members and has amended its quorum rule. Three proposals touching GPs are open, and the pay-to-play rule stays in force.
The Securities and Exchange Commission now has two sitting members out of five. Commissioner Hester Peirce departed on 2 October 2026, as announced, which leaves Chairman Paul Atkins and Commissioner Mark Uyeda, both Republicans, with three seats vacant. On the same day, 2 October 2026, the agency published an amendment to its quorum rule in the Federal Register, effective immediately. For a GP, the practical question is not who sits on the Commission but which pending proposals might change your obligations, and which rules bind you today.
What changed on 2 October
The amendment, Release No. 34-106537, changes 17 CFR 200.41, the rule that defines a quorum of the Commission. The standing rule says that a quorum is three members and that when fewer than three commissioners are in office, a quorum is the number in office, a position that dates from 1995. The new language adds that when all other commissioners in office are disqualified from a particular matter, one commissioner may constitute a quorum for it. The agency adopted the change without a comment period, relying on the exception for rules of agency management.
The effect is narrow. It does not alter any rule that applies to advisers or funds. It matters because, with two members, both must take part for the Commission to act unless one is recused, and the amendment now allows the other to proceed alone in that case. Whether that affects timing for any given proposal is not something the agency has said.
Which proposals are open
Several proposals that touch private fund managers are in progress, and none of them is final. The Commission proposed on 3 September 2026 to rescind Rule 206(4)-5, the adviser pay-to-play rule, together with the related recordkeeping requirement in Rule 204-2(a)(18). It was published in the Federal Register on 10 September 2026, and comments are due by 9 November 2026. We set out the details in our earlier note on the proposal to scrap the adviser pay-to-play rule. On 30 September 2026 the Commission proposed amendments on retail access to private markets, including ways to qualify as an accredited investor, and invited comment for 60 days after Federal Register publication; see our summary of the retail access proposal. On 1 October 2026 it also proposed rules on custody of crypto assets by advisers and funds. Separately, in September 2026 the SEC and CFTC jointly extended the compliance date for the 2024 Form PF amendments to 1 July 2027 (Release IA-6992), which we covered in what managers should do about Form PF.
What stays in force while the proposals are pending
Rule 206(4)-5 remains in effect during the rulemaking, so advisers should continue to comply. Contributions made now can still trigger the two-year timeout, with consequences during any transition period. State and local pay-to-play laws are not affected by the federal proposal, and limited partnership agreements and side letters often refer to the rule directly. Those contractual terms continue to bind a manager even if the federal rule goes.
How to read the status of each item
A rule change moves through stages, and the stage tells you how much weight to give it. A proposal asks for comment and does not bind anyone. A final rule is adopted but may not yet be effective. An effective rule may still have a later compliance date. In this note, the quorum amendment is final and effective as of 2 October 2026; the Form PF change is a final extension that sets 1 July 2027 as the compliance date; the pay-to-play rescission and the retail access changes are proposals at the comment stage; and the crypto custody item is a proposal announced on 1 October 2026. Treating a proposal as if it were final, in either direction, is the most common way for a manager to get its compliance plan wrong.
What to do now
First, keep complying with the pay-to-play rule: pre-clearance of political contributions, lookback diligence on new hires and the records the rule requires. Second, audit your fund documents and public plan agreements for language that hard-wires the federal rule, since you may need to keep the behaviour even if the rule changes. Third, calendar 9 November 2026 and decide, with your counsel, whether to file a comment. Fourth, when the retail access proposal appears in the Federal Register, compute the 60-day deadline and note it. Fifth, do not rely on any proposal as relief until a final rule is adopted and its effective date has passed.
If you raise from public pension funds, expect their own policies to stay in place regardless of what happens in Washington, and keep your political contribution policy aligned with each plan's.
What to watch next
Watch for nominations to the three vacant seats, for the Federal Register publication date of the retail proposal and for any final action on the pay-to-play rescission after the 9 November comment deadline. FundLinx members can see which pension funds require pay-to-play disclosures this quarter.
This article is general information and is not legal advice.
FundLinx Intelligence | FundLinx.ai