In response to petitions from the industry, the SEC proposed amendments to the rules that define which investment advisers, registered investment companies (RICs), and business development companies (BDCs) qualify as small entities for purposes of the Regulatory Flexibility Act (RFA). The proposal would 1) increase the assets under management threshold below which an investment adviser would be considered a small entity from $25 million to $1 billion and 2) increase the net asset threshold for investment companies from $50 million to $10 billion. These thresholds would be inflation-adjusted every 10 years. A fundamental purpose of the RFA is to promote the effectiveness and efficiency of government regulations, including through consideration of alternative regulatory approaches, with the goal of minimizing the significant economic impact on small entities. Increasing this threshold will require a more accurate cost-benefit and small business impact analysis in future rulemaking efforts and should reduce regulatory cost and burdens for smaller advisers, including both exempt reporting advisers (ERAs) and smaller registered investment advisers (RIAs), as well as smaller RICs and BDCs. Form ADV Item 12 of Part 1A would be amended in conformity with the change. The Investment Adviser Association (IAA) and other industry representatives have been lobbying for this change for some time as they support "thoughtful, effective regulation that protects investors while ensuring that smaller advisers are not disproportionately burdened by one-size-fits-all regulatory analysis and requirements." We will continue to monitor the status of the proposed amendment.