SEC Raises Small Adviser Thresholds to $1 Billion

The Commission raised the small adviser asset threshold from $25 million to $1 billion and the small investment company threshold from $50 million to $10 billion.

Updated on Nov. 4, 2026 in Investing

SEC Raises Small Adviser Thresholds to $1 Billion

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Should federal regulators relax rules for smaller financial advisers and funds?

The Securities and Exchange Commission adopted amendments to the rules defining small entities under the Regulatory Flexibility Act. The changes raise the regulatory assets under management threshold for a small adviser from $25 million to $1 billion.

Why it matters

The Commission says the small entity definitions were last updated in 1998 and that current analyses have not assessed the effects of rulemaking on most registered advisers. The new thresholds are intended to capture a more meaningful population of small entities in economic analysis.

The amendments raise the small adviser RAUM threshold from $25 million to $1 billion and the small investment company net asset threshold from $50 million to $10 billion. A $1 billion threshold covers 75% of advisers while representing under 3% of total industry RAUM, and the stub does not indicate how these figures will affect individual firms' obligations.

The players

U.S. Securities and Exchange Commission

The federal agency that regulates securities markets and investment advisers in the United States, responsible for enforcing federal securities laws.

U.S. Department of the Treasury

The federal executive department responsible for managing government finances and advising on fiscal and financial policy, which recommended the SEC review these definitions in October 2017.

The details

The SEC adopted the amendments through a rulemaking process that followed a proposal receiving commenter input. The changes do not alter any substantive requirement applicable to any firm, but update the thresholds that define which entities count as small under the Regulatory Flexibility Act.

1982: Small entity thresholds under Rules 0-7 and 0-10 were adopted.
1998: The small entity thresholds were last updated.
2010: The Dodd-Frank Act raised the SEC-registration threshold for advisers to $100 million.
October 2017: The Treasury Department recommended that the SEC review and update the small entity definitions.
November 4, 2026: The Commission adopted the small entity definition amendments.

Market Dynamics

The amendments follow the Dodd-Frank Act of 2010, which raised the SEC-registration threshold for advisers to $100 million, while the small adviser RAUM threshold stayed at $25 million. The Commission's move to raise that threshold to $1 billion updates the small entity definitions that had lagged behind the registration framework since 1998.

Investors in smaller advisory firms and investment companies may see different regulatory treatment under the updated small entity definitions, though the amendments do not change any substantive requirement. Retail investors evaluating an adviser or fund can check its registration status and asset size with the SEC before making allocation decisions.

The takeaway

Asset-size thresholds determine how regulators classify firms, which affects the analysis behind future rules. Investors comparing advisers or funds should note that a firm's size classification does not change its obligations to clients.