SEC updates small-entity definition for advisers, funds and BDCs

The SEC adopted amendments to the asset-based thresholds that define small registered investment companies, investment advisers and business development companies under the Regulatory Flexibility Act.

The thresholds had not been updated in nearly 30 years, Chairman Paul S. Atkins said. He 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."

For advisers and fund boards, the practical effect is downstream: the SEC will use the updated small-entity population as the baseline for future compliance-cost estimates. The agency will also use that baseline when deciding how hard a new rule should press on smaller managers.

The RFA directs the Commission to weigh the impact of its rules on small entities and consider alternative regulatory approaches to minimize significant economic impact on them.