When J.P. Morgan Securities was helping Alabama’s Jefferson County finance billions of dollars in sewer improvements years ago, the Wall Street powerhouse arranged millions of dollars in illegal payments to firms with close ties to local politicians, according to the SEC.

J.P. Morgan employees privately described such deals as “payoffs,” the Securities and Exchange Commission alleged.

And by the time one local official was sent to prison last year in a related case, the sewer financing had proved disastrous for the county.

To spare other investors similar misfortune, the SEC on Wednesday proposed new standards of conduct for banks and other firms that deal in complex financial instruments known as “swaps.”

The proposed rules are part of the government’s push to impose order on the vast but historically unregulated trade in derivatives, an often lucrative but risky business.

Congress and President Obama directed the SEC to establish standards of conduct under the Dodd-Frank Act adopted last year in response to the financial crisis.

The plan the SEC advanced Wednesday says swap dealers would have to disclose to their buyers the significant risks of the transactions, the conflicts of interest involved and the daily values of the swaps, which would help buyers judge whether they are getting a fair deal.

Dealers would be barred from engaging in “pay to play” prac­tices — for example, making political contributions to win a municipality’s business.

When dealing with a special category of clients — such as municipalities, endowments or pension funds — they would have to ensure that their clients use independent, sophisticated financial advisers.

“The rules we are proposing today would level the playing field . . . by bringing needed transparency to this market and by seeking to ensure that customers in these transactions are treated fairly,” SEC Chairman Mary L. Schapiro said.

Swaps, a form of derivative, can be used to hedge against risks or to make speculative investments. The SEC has jurisdiction over swaps tied to securities. The Commodity Futures Trading Commission has authority over others and has proposed parallel standards.

Both agencies have fallen behind schedule in writing a host of rules about derivatives and have given the industry a temporary reprieve from some of the Dodd-Frank requirements.

The five SEC commissioners voted unanimously Wednesday to propose the standards of conduct for swap dealers.

The proposal is subject to a period of public comment that is scheduled to end Aug. 29, before a final vote by the commissioners.

Commissioner Troy A. Paredes said the proposal goes beyond what the Dodd-Frank Act required and could make hedging more expensive for some swap buyers.

SEC officials cited Jefferson County’s experience as an example of what they are trying to prevent.

Swaps were a key element of the package J.P. Morgan sold Jefferson County. For that county, as for many municipalities, they backfired during the financial crisis, becoming a costly problem.

In public disclosures about the transactions, J.P. Morgan neglected to mention the alleged payoffs, the SEC said in a 2009 enforcement action against the firm. The firm passed the cost of the secret payments on to the county by charging higher interest rates on the swaps, the SEC alleged.

The transactions, which dated to 2002 and 2003, later blew up for the county, and in early 2009 a J.P. Morgan affiliate presented the county with a bill for $647.8 million over the terminated swaps, the SEC said.

J.P. Morgan settled with the agency in November 2009. Without admitting or denying wrongdoing, the firm agreed to forfeit the termination fees, pay a $25 million fine and pay $50 million to the county.

Two former J.P. Morgan managing directors were charged with wrongdoing in the case and have been fighting the SEC in court. In their defense, they have argued that the swaps involved fell outside the agency’s jurisdiction.