Bill that Reduces Regulations on Independent Advisors Passes House of Representatives
The House of Representatives passed The Small Entity Update Act this week that would reduce regulatory burden on independent financial advisors.
The bill passed by a vote of 367 to 8 and will move to the Senate. Should it become law, the bill would require the Securities and Exchange Commission to study and update its definition of “small entity” within one year and every five years thereafter, which could significantly impact independent financial advisors.
Originally, the act passed unanimously in April through the House Financial Services Committee after being presented by Representative Ann Wagner (R-Missouri).
The review would include consideration for how large the financial services industry has become and guarantee that the definition reflect this.
Currently, advisers with less than $25 million in assets under management are not required to register with the SEC since they are considered “small entities,” but the SEC requires those with $110 million or more to do so.
Per Representative Wagner, a change to the current rules would reduce regulatory burdens on small businesses and advisers impacted by SEC regulations.
In a statement, Karen Barr, the president and CEO of the Investment Adviser Association, said that, “The IAA is delighted the House of Representatives has passed the Small Entity Update Act, which requires the SEC to update its small business definition. Due to an outdated definition, the SEC has not been required to explicitly consider reasonable alternatives to proposed regulations for smaller investment advisers. The IAA strongly supported this bill and urges the Senate to take it up promptly.”