Planned changes by the Securities and Exchange Commission would cut off Pennsylvania politicians from a frequent source of campaign cash.

The proposal by SEC Chairwoman Mary L. Schapiro would stop state and local governments from hiring SEC-registered money-management firms whose bosses had donated, in the previous two years, to anyone running for governor or other offices that influence who gets hired to manage the people's money.

Schapiro's plan would also stop firms from hiring politically savvy "placement agents" paid to urge state investment officials to hire their clients.

In a memo supporting the ban and asking for public comment, Schapiro cites the recent criminal convictions of New York state officials for taking "pay-to-play" cash from investment firms, in exchange for state contracts.

But "the full extent of pay-to-play practice remains hidden and is also hard to prove," she added.

So Schapiro is trying to be proactive, reducing what lively Sister Bernetta, before my First Confession back at St. Monica's long ago, used to call "the near occasions of sin."

Pennsylvania spends about half a billion dollars a year on fees to hundreds of private money managers at the state employees' and state teachers' pension funds (SERS and PSERS), and millions more on the pros who invest other state money.

The managers are picked by boards whose members are named by the governor and state Senate and House leaders.

Add fees from Pennsylvania's 3,000 county and municipal pension plans - more than in any other state - and it's no wonder the state draws so many hungry fund managers.

People who run financial firms, like other wealthy and successful Americans, are often campaign donors.

I checked the Department of State campaign database for executives at the state's four highest-paid pension fund managers, Blackstone Capital and Morgan Stanley in New York, Mesirow in Chicago, and Pacific Alternative Asset Management Co. L.L.C. in Irvine, Calif. Each appeared on the list of donors who gave Gov. Rendell $5,000 or more the last time he ran.

Together, those four firms collected more than $50 million in fees from the Pennsylvania State Employees' Retirement System last year, as its value declined $11 billion, to about $24 billion. SERS doesn't report each firm's annual performance.

Bosses at commercial banks that do public business - PNC, Wachovia, Mellon - have given money to politicians in multiple state races. Locally based money managers such as Emerald Capital in Lancaster and Cross Atlantic Capital Partners in Radnor also show up on donor lists.

Under the SEC plan, they would have to choose between backing candidates and seeking state fees.

This isn't an issue in New Jersey, says Orin Kramer, the New York hedge fund manager and political fund-raiser who is chairman of the New Jersey State Investment Council.

"Our policy says [money managers] can't give to any statewide official, governor, controller, can't give to any state [party] committee, any legislator, any legislative committee" if they want state business, Kramer told me. He says New Jersey's ban is stricter than the SEC's proposal, and he asked Schapiro not to "preempt" it in a letter last month.

After a career of squeezing all kinds of businesspeople for support, lame-duck Pennsylvania Gov. Rendell "is generally supportive of the ban," said his spokesman, Gary Tuma. "He sees it as a logical extension of the bans on underwriters and bond buyers."

Rendell ally and former Pennsylvania Treasurer Barbara Hafer disagrees. "People give you money because they want access," and that's how it should be, as long as it's disclosed, she told me from a convention of the National Association of State Treasurers in California.

Current state Treasurer Rob McCord is a former money manager whose donors during last year's election include managers he now oversees.

McCord's responsibilities include the 529 Guaranteed Savings Plan, which outraged parents earlier this month when McCord imposed higher fees and surcharges to help cover $400 million in past investment losses.

At least three of the money managers who donated to McCord managed funds for the plan. The biggest donations came from officers of GKM Newport, a Los Angeles private-investment manager hired before McCord took over.

GKM officers gave McCord $37,000 during his treasurer campaign last year. The state paid GKM $240,000 in fees during the first half of this year. According to the plan's annual report, plan funds managed by GKM lost $1.7 million during the second-quarter market rally.

"The devil is in the details," said McCord spokeswoman Carrie Lepore, when I asked whether her boss supported the SEC proposal. "No regulation is a substitute for strong ethics."