The U.S. House of Representatives passed legislation this week that would direct the Securities and Exchange Commission (SEC) to assess regulatory costs of compliance for small and growing businesses.
The Small Entity Update Act (H.R. 2792), introduced by U.S. Rep. Ann Wagner (R-MO), seeks to ensure that regulations placed on these businesses are not overly burdensome. Specifically, the bill would require the SEC to conduct a study on the compliance impact costs on small businesses, then craft rules consistent with the results of the study.
“The Small Entity Update Act plays a vital role in expanding investment opportunities for all Americans, improving access to capital for small businesses, and strengthening our public markets. Small businesses, which make up 99% of all enterprises and employ almost half of the U.S. workforce, are disproportionately affected by overly burdensome regulatory barriers. These companies represent the engine of our economy and are far too often subject to one-size-fits-all regulations that limit job creation and economic growth,” Wagner, chair of the House Subcommittee on Capital Markets, said.
The study – which would define the term “small entity” under the Regulatory Flexibility Act — would be conducted every five years.
“My bill will require the SEC to re-evaluate their small business definition every five years,” Wagner added. “Small entities simply can’t afford the number of lawyers and regulatory experts that large, multinational firms can to comply with every regulation while still being able to afford the cost of doing business. The government cannot, and should not, treat a small startup in Ballwin, Missouri with seven employees as it would a Fortune 500 company. The Small Entity Update Act will lead to a more targeted regulatory framework for these entities and help make the American dream a reality for all entrepreneurs.”