Key Highlights
- On Wednesday, the commission proposed amendments to rules clarifying which investment companies, advisors and business development companies qualify as small entities under the Regulatory Flexibility Act (initially passed by Congress in 1980).
- The proposed changes would increase the asset threshold for considering advisors as small from $25 million to $1 billion. The rule mandates federal agencies to analyze (and minimize) the potential economic impact of rulemaking on smaller companies. According to SEC Chair Paul Atkins, the proposals are “consistent with the SEC’s intent to modernize regulatory requirements” by reassessing which advisors and companies under the commission’s purview should actually be deemed small.
- “This, in turn, would help the commission more appropriately promote the effectiveness and efficiency of its regulations, with the goal of minimizing the significant economic impact on small entities,” Atkins said.
- According to MarketCounsel CEO Brian Hamburger, the result should mean fewer “one-size-fits-all” assumptions in new rules, with “more realistic compliance times, reduced documentation requirements in some cases, and a more thoughtful cost-benefit analysis” reflecting how advisors work.
- “Day-to-day, advisors won’t suddenly have fewer rules to follow,” he told Wealth Management.
