WASHINGTON, D.C. — U.S. Senators Katie Britt (R-AL) and Andy Kim (D-NJ) have introduced the Small Entity Update Act, a bipartisan effort to modernize the Securities and Exchange Commission’s (SEC) regulatory framework and provide relief to small businesses and entrepreneurs.
The legislation directs the SEC to update its decades-old definition of a “small entity” and evaluate the financial impact of regulatory compliance on small and growing businesses. Lawmakers say the goal is to ensure that SEC rulemakings do not place unnecessary or excessive burdens on smaller entities.
“Alabama’s small businesses create opportunity, jobs, and economic growth throughout the state, and our small investment advisers help provide financial guidance for so many families and entrepreneurs,” said Senator Britt. “This bill ensures these small entities are not unduly impacted by onerous regulations so they can continue to play pivotal roles in our economy.”
Senator Kim echoed those sentiments, emphasizing the bipartisan nature of the bill. “Every entrepreneur deserves a fair shot at success, free from outdated and overburdensome red tape,” he said. “This bill is a straightforward way to modernize and stand by our smallest businesses.”
Under the Regulatory Flexibility Act of 1980, the SEC must consider the impact of its rules on small entities and seek less burdensome alternatives when appropriate. However, the current definition — last updated over 25 years ago — applies only to investment advisers managing less than $25 million in assets, despite the SEC registration threshold now being $100 million.
This outdated standard excludes most small investment advisers from regulatory consideration. The Small Entity Update Act would require the SEC to assess market growth, adjust the definition accordingly, and link future updates to inflation every five years.
The bill mirrors a companion measure introduced in the U.S. House by Rep. Ann Wagner (R-MO) and has already gained support from the Investment Adviser Association (IAA). “For too long, this outdated standard has allowed the SEC to bypass meaningful consideration of less burdensome regulatory alternatives for small advisers,” the IAA stated, urging swift passage of the legislation.
Senator Britt continues to advocate for Alabama’s small businesses and financial institutions, emphasizing the importance of ensuring fair and modernized regulatory practices that support long-term economic growth and opportunity.
