Regulatory & Compliance | 01.08.26

SEC Proposes Raising 'Small Entity' Threshold to $1bn, Affecting 75% of RIAs

by: Sam Bojarski

The U.S. Securities and Exchange Commission (SEC) has proposed raising the “small entity” threshold for registered investment advisors (RIAs) from $25 million to $1 billion in assets under management (AUM), potentially affecting 75% of RIAs. Currently, only 3% of SEC-registered advisors qualify as small entities. The change follows industry advocacy and aligns with the Regulatory Flexibility Act, aiming to reduce regulatory impact on smaller firms. The proposal also raises the control relationship threshold to $1 billion. The SEC notes that while most firms would qualify under the new definition, they collectively manage under 3% of total industry AUM, leaving large firms largely unaffected. Public comments are open for 60 days.

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