Britt and Kim propose bipartisan bill to reduce regulations for small businesses

U.S. Senators Katie Britt and Andy Kim have recently put forth the Small Entity Update Act on a bipartisan basis to revamp the Securities and Exchange Commission’s (SEC) regulatory framework, aiming to alleviate the regulatory burden on small businesses and entrepreneurs. The proposed legislation urges the SEC to redefine what constitutes a “small entity” and assess the financial repercussions of compliance with regulations for smaller and burgeoning enterprises. The primary objective is to prevent SEC rulemakings from imposing unnecessary or excessive constraints on smaller entities.

Senator Britt underscored the significant role of small businesses in generating opportunities, jobs, and economic development across Alabama, highlighting the crucial financial guidance provided by small investment advisers to families and entrepreneurs. She emphasized the necessity of shielding these small entities from stringent regulations that could impede their contributions to the economy. Senator Kim echoed her sentiments, emphasizing the bipartisan nature of the bill and emphasizing the importance of providing every entrepreneur with a fair chance to thrive without being hampered by outdated or overly burdensome bureaucratic requirements.

The current definition of a small entity, established under the Regulatory Flexibility Act of 1980, was last revised more than 25 years ago and is limited to investment advisers overseeing less than $25 million in assets, despite the SEC’s registration threshold now standing at $100 million. Consequently, most small investment advisers are excluded from regulatory considerations due to this antiquated standard. In response, the Small Entity Update Act mandates the SEC to evaluate market developments, update the definition accordingly, and tie future revisions to inflation every five years.

The proposed legislation closely mirrors a corresponding measure introduced in the U.S. House by Rep. Ann Wagner and has garnered backing from the Investment Adviser Association (IAA). The IAA criticized the outdated standard for enabling the SEC to neglect exploring less burdensome regulatory options for small advisers, urging prompt approval of the bill. Senator Britt continues her advocacy for Alabama’s small businesses and financial institutions, stressing the importance of implementing fair and contemporary regulatory measures that bolster long-term economic growth and opportunities for all.