The SEC Raised the Small-Entity Threshold for Investment Advisers From $25 Million to $1 Billion in Assets on 4 November: What Fund Managers Should Check

On 4 November 2026 the Securities and Exchange Commission adopted amendments to the rules that define which registered investment companies, investment advisers and business development companies count as small entities under the Regulatory Flexibility Act. For investment advisers, the assets under management threshold below which an adviser is a small entity rises from $25 million to $1 billion. The SEC said the asset-based thresholds had not been updated in nearly 30 years. Many fund managers, especially an emerging manager with a first or second fund, will now fall under a much higher line. This is a summary of two SEC documents, and it is not legal advice.

What the SEC adopted

The SEC's press release says the amendments increase the asset-based thresholds, update the way related funds' assets are aggregated, eliminate the investment adviser total assets threshold, and provide for inflation adjustments to the thresholds by order every 10 years. The accompanying fact sheet gives the numbers. For investment advisers the AUM threshold under Rule 0-7 moves from $25 million to $1 billion, and for investment companies the net asset threshold under Rule 0-10 moves from $50 million to $10 billion. The fact sheet says the adviser total assets threshold is eliminated, with related conforming changes to the control relationship thresholds. The SEC says it will also amend Form ADV to conform to the new Rule 0-7 thresholds and make certain clarifying changes.

The dates

The SEC adopted the amendments on 4 November 2026 and said the adopting release will be published in the Federal Register. The fact sheet says the amendments become effective 90 days after that publication. As of this writing we have not seen the Federal Register date, so the effective date cannot yet be calculated. Once the date is known, count 90 days forward from it.

What the documents do not say

The SEC frames this as a change to a definition used for its own analysis. The Regulatory Flexibility Act asks the Commission to consider the effect of its rules on small entities, and the press release says the amendments are intended to make that analysis capture a more meaningful population of firms. Neither document lists a new filing duty for advisers, and neither says an adviser below the new threshold is exempt from any rule. We did not review the full adopting release, so confirm with counsel before assuming that nothing about your own obligations changes. The fact sheet also does not explain how the revised control relationship thresholds work for advisers that share owners or affiliates.

Why it matters to a GP

A higher threshold changes who the SEC counts when it estimates the burden of a proposed rule. That matters because rule proposals have been moving. The SEC and the CFTC extended the compliance date for the 2024 Form PF amendments from 1 October 2026 to 1 July 2027 in a joint final rule the CFTC announced on 31 August 2026, saying the extension gives them time to consider comments on an April 20, 2026 proposal to amend or eliminate those amendments. The SEC also published its examination priorities for fiscal 2027 on 23 October, which we covered in our note on private funds and private credit in the exam priorities. Both show a Commission that is actively revisiting the burden on private fund advisers. For a placement agent angle on recent changes, see our notes on FINRA's private placement filing exemption and on FINRA's projected returns exception.

A worked example

This is an illustration, not a case from any firm. Suppose a manager has $400 million in assets under management across two funds. Under the old Rule 0-7 threshold of $25 million, that manager was far above the line. Under the new threshold of $1 billion, the same manager is below it, so it would be counted among small advisers in the SEC's analysis, subject to the other conditions in the rule, which the fact sheet describes only as conforming changes to the control relationship thresholds. Nothing in the two documents says that this changes what the manager must file or disclose, so the sensible step is to read the adopting release before drawing a conclusion.

What fund managers should check

This section is our suggestion, not regulator guidance. First, compare your assets under management and your affiliates against the new threshold and note which side of $1 billion you sit on. Second, read the adopting release when it is available, and in particular the section on control relationships and aggregation. Third, watch the Federal Register for the publication date and mark 90 days after it as the effective date. Fourth, watch for changes to Form ADV, since the SEC says it will conform the form, and plan time to update your filing. Fifth, remember that LP due diligence will still ask about your compliance programme whatever size band you fall into. Sixth, ask counsel whether the change affects any filing, disclosure or comment you plan to make.

What to watch next

Watch for the Federal Register publication, for the Form ADV amendments the SEC has said it will make, and for any final action on the April 2026 Form PF proposal before the 1 July 2027 compliance date. FundLinx members can see which institutions are allocating in your strategy.

This article is general information and is not legal advice.

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