By Conner Cates, Senior Manager, U.S.
Can your firm file as an exempt reporting adviser (ERA) or does it need to become a registered investment adviser (RIA)? The longstanding $150 million threshold that firms have come to know as the determining standard could soon see significant change thanks to bipartisan bill HR 3673.
On June 3, 2025, House Representatives Andy Barr and Nydia Velazquez introduced a bipartisan bill to congress titled House Rule (HR) 3673, the Small Business Investor Capital Access Act. HR 3673 seeks to amend Section 203(m) of the Investment Advisers Act of 1940, as amended, by inserting an inflation adjustment mechanism for ERAs relying on the private fund exemption.
The text of the amendment introduces two inflation adjustments:
- The threshold of $150 million in assets under management (AUM) is to be aligned with current inflation adjustments, based on the Consumer Price Index for All Urban Consumers (CPI), dating back to the threshold’s enactment in 2010
- CPI adjustments are to be applied to the threshold annually thereafter
If this bill passes both houses and is signed into law, the longstanding $150 million threshold dictating whether a firm must fully register as an RIA or if they may continue to file as an ERA may see significant change.
The CPI rate as of July 2010, around the time when the original threshold was enacted, was 217.6. By June 2025, the CPI rate was 322.5. At the time of writing, the CPI rate has increased by approximately 2.7% over the past year alone. The change between 2010 and now suggests that the RIA filing threshold may be primed for a sizeable adjustment.
So what does this mean for firms should the amendment pass?
- This amendment would allow firms the option to remain ERAs longer without having to register as an RIA
- Firms would have more time to prepare for registration. The transition from ERA to RIA can be a significant step up from a compliance perspective. Crossing the RIA threshold brings with it a plethora of additional considerations, including increased SEC examination scrutiny, additional compliance costs, and additional reporting and disclosure requirements
- RIAs that don’t meet a new higher threshold may re-file as an ERA. Firms that aren’t pursuing growth or are satisfied with the current size of their portfolio may elect to file as an ERA, reducing their regulatory obligations. Those firms who may consider moving from RIA to ERA should consult with counsel or their regulatory consultants to explore the pros and cons of making this shift
After being introduced to congress in June, the amendment was sent to the House Committee on Financial Services who, on July 22, 2025, ordered that the rule be reported and discussed further by the full House of Representatives.
While still early, IQ-EQ will be keeping an eye on this space and will continue to provide updates, as this may result in significant impact on firms currently registered with the SEC.
