SEC rewrites who counts as a small fund or adviser

The U.S. securities regulator said Wednesday that it had rewritten how it decides whether registered funds, advisory firms, and business development companies count as small for Regulatory Flexibility Act reviews.

In release 2026-112 from Washington, dated Nov. 4, 2026, the Securities and Exchange Commission reported that it adopted amendments to those classification rules. The package lifts the asset cutoffs that place investment companies, investment advisers, and business development companies in the small-entity category, the Commission said. It also changes how assets of related funds are added together for that test, drops the investment adviser total assets cutoff, and lets the agency refresh the asset cutoffs for inflation by order every 10 years, according to the announcement.

Commission staff framed the move as a response to expansion in asset management since the old cutoffs were first written. Officials said Regulatory Flexibility Act reviews should reach a clearer set of investment companies, investment advisers, and business development companies treated as small, and should lessen the significant economic impact of SEC rules on those participants.

Chairman Paul S. Atkins tied the vote to a nearly 30-year gap since the last rewrite of the small-entity definition for investment companies and investment advisers. He described the update as a way to remove needless regulatory burdens and bring the rulebook current, and said the new text better matches which firms look small against today’s market so rulemaking tracks that picture.

Separately, the release restated the Regulatory Flexibility Act’s aim: stronger, more efficient rules, including by weighing other approaches, while limiting the significant economic impact of federal rulemaking on small entities. The Commission said it already shapes requirements around the traits of the firms it oversees and measures effects on small entities when it runs regulatory flexibility analysis under the Act.

An adopting release is on the SEC site and is set for the Federal Register, the agency said, with a final rule and fact sheet posted as related materials.