The Securities and Exchange Commission (SEC)) is amending rules that define which registered investment companies, investment advisers, and business development companies qualify as small entities.
The adopted amendments recognize the substantial growth in the asset management industry since the asset-based thresholds for identifying “small entities” were initially set in 1982.
“Updating the SEC’s definition of small entities for investment companies and investment advisers – which has not been done in nearly 30 years – is an important step to eliminate unnecessary regulatory burdens and modernize our rulebook,” SEC Chairman Paul Atkins said. “These amendments more accurately capture the types of registered investment companies, investment advisers, and business development companies that are considered small relative to today’s market and will help ensure the Commission’s rulemaking is reflective of that reality.”
Specifically, the amendments:
- Increase the asset-based thresholds under which investment companies, investment advisers, and business development companies are deemed small entities.
- Update the way that related funds’ assets are aggregated for purposes of defining small entities.
- Eliminate the investment adviser total assets threshold.
- Provide for inflation adjustments to the asset-based thresholds by order every 10 years.
The adopting release is published on the SEC website and will be published in the Federal Register.