H.R. 3382: Small Entity Update Act

The proposed bill, known as the Small Entity Update Act, aims to update the definition of the term "small entity" as it relates to the activities of the Securities and Exchange Commission (SEC). This process involves a series of studies and potential rulemaking to ensure that the definition remains relevant and reflects current market conditions. Below are the key components of the bill:

Definition of Small Entity

The bill stipulates that the SEC must define "small entity" in accordance with guidelines established in section 601 of title 5 of the United States Code. This term could encompass small businesses, small organizations, and small governmental jurisdictions relevant to the SEC's operations.

Study and Reporting Requirements

Within one year of the bill's enactment, the SEC is required to:

• Conduct a comprehensive study of the existing definition of "small entity."
• Evaluate how well this definition aligns with findings from the Regulatory Flexibility Act.
• Assess growth in U.S. financial markets since the last definition adjustment.
• Determine how to redefine "small entity" to include a significant number of organizations.

Five years after the initial study, a follow-up study is mandated to ensure that the definition remains appropriate.

Report Submission

The SEC must submit a report to Congress, which includes:

• The findings from the study.
• Specific recommendations for amending the definition to align with study results and potentially increase the number of entities classified as "small entities."

Rulemaking Process

Following each study, the SEC is tasked with revising its rules to reflect the findings of the study. This process will involve public notice and an opportunity for comments from the public, ensuring transparency in the rulemaking process.

Adjustments for Inflation

Once the SEC has established new rules based on the studies, it must also adjust the monetary figures related to the definition of "small entity" every five years. This adjustment will be based on the Consumer Price Index for All Urban Consumers, ensuring that the classification keeps pace with inflation and reflects current economic realities.

Relevant Companies

None found