SEC proposes amendments to small entity definitions

The SEC on Friday proposed amendments to the rules that define which registered investment companies, investment advisers, and business development companies qualify as small entities for purposes of the Regulatory Flexibility Act.

The proposal, according to a news release, is designed to help the SEC tailor its analyses to the specific regulatory challenges that small investment companies and advisers face. In turn, this would inform the SEC of the regulatory impacts that small entities encounter.

The SEC “has a long-standing commitment to understanding and addressing the concerns of small entities,” SEC Chairman Paul Atkins said in the release. “Today’s proposal — consistent with the SEC’s intent to modernize regulatory requirements — would further this commitment by more accurately capturing the types and numbers of investment advisers and investment companies that are small.”

According to the release, the proposal would:

• Increase the asset-based thresholds under which investment companies and investment advisers are deemed small entities;
• Update the way that related funds’ assets are aggregated for purposes of defining small entities; and
• Provide for inflation adjustments to the asset-based thresholds by order every 10 years.

The proposing release will be published in the Federal Register. The comment period will remain open for 60 days from the date of publication.

— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.