US Raises Asset Limit to 1 Billion US Dollars for Smaller Investment Advisers

November 5, 2026 | By Semahegn Nigatu

The US Securities and Exchange Commission (SEC) has raised the asset threshold for investment advisers to qualify as small entities from 25 million US dollars to 1 billion US dollars, updating a definition that had not been revised in nearly 30 years.

The amendments, adopted on November 4, 2026, are intended to ensure that the financial regulator considers the impact of its rules on a larger number of smaller investment firms when assessing new regulations.

Under the previous definition, an investment adviser could qualify as a small entity only if it managed less than 25 million US dollars in regulatory assets, held less than five million US dollars in total assets and met other conditions. The SEC has now raised the assets-under-management threshold to 1 billion US dollars and removed the separate total-assets test.

The changes could bring a substantially larger share of registered investment advisers within the category considered in the commission’s regulatory impact assessments. SEC Commissioner Mark Uyeda said the revised threshold would cover about 75 percent of advisers, although those firms collectively account for less than three percent of the industry's total regulatory assets under management.

The SEC has also raised the threshold for investment companies to qualify as small entities from 50 million US dollars to 10 billion US dollars in net assets. The amendments further change how assets held by related funds are combined when determining eligibility.

The revisions fall under the Regulatory Flexibility Act, which requires federal agencies to assess how proposed regulations could affect small businesses and organisations and consider alternatives to reduce significant economic burdens.

SEC Chairman Paul Atkins said the changes would modernise the agency’s rules and help reduce unnecessary regulatory burdens on smaller market participants.

The new definitions do not exempt qualifying firms from existing SEC regulations or change the threshold for determining whether an investment adviser must register with the federal regulator. Instead, they expand the group of firms whose circumstances must be considered when the commission evaluates the economic impact of its rulemaking.

The amendments will take effect 90 days after publication of the adopting release in the Federal Register.

Source: FSX Business News