SEC ordered to modernize its outdated small business size rules

What does this do?

HR 3382 directs the SEC to study its current definition of "small entity" within one year of enactment and again five years later, then report findings to Congress and update its rules accordingly. The bill also requires automatic adjustments to size thresholds every five years to account for inflation. No existing regulations are eliminated; the bill solely directs the SEC to evaluate whether its current size categories remain appropriate.

Who does it affect?

The bill most directly affects small and mid-sized businesses subject to securities laws, including smaller investment firms, broker-dealers, and companies that raise money from investors. Investors and the broader public may be affected indirectly, since changes to SEC regulation of smaller financial companies can influence market rules more broadly.

Why does it matter?

The current definition of "small entity" is considered outdated and may not reflect the growth of financial markets over time. If more businesses qualify as small entities, they become entitled to regulatory burden considerations that federal law already requires agencies to apply when writing new rules.

Where does it stand?