SEC Issues Rule Proposal Amending the “Small Entity” Designation

On January 7, the Securities and Exchange Commission (SEC) proposed amendments that would raise the threshold for certain registered investment companies, registered investment advisers, and business development companies for purposes of the Regulatory Flexibility Act. If approved, the rule would increase the net asset threshold for a “small entity” investment company from $50 million to $10 billion and increase the AUM threshold for investment advisers from $25 million to $1 billion. According to a Stradley Ronon client alert currently less than 1% of investment companies meet the definition and “if adopted, approximately 23% of individual investment companies would meet the definition...” The proposal would allow the SEC to make future inflation adjustments to AUM-based thresholds by order every 10 years. Comments are due on the proposal 60 days after its publication in the Federal Register.

Click here to read a press release covering the rule proposal.
Click here to read the rule proposal.
Click here to read a client alert on the proposal from Stradley Ronon.