H.R. 3673, Small Business Investor Capital Access Act

H.R. 3673 would amend the financial threshold used by the Securities and Exchange Commission (SEC) to determine if an investment advisor for a solely private fund is exempt from the SEC’s registration requirements. The bill would increase the threshold to $175 million and change the threshold every five years thereafter to account for inflation. Under current law, such investment advisors that manage assets below $150 million are exempt and do not pay registration fees to the SEC.

Using information about the cost of similar provisions, CBO estimates that updating its regulations would cost the SEC less than $500,000 including the fees that advisors newly exempt under H.R. 3673 would no longer pay. Because the SEC is authorized to collect fees each year to offset its annual appropriation, which includes fees paid by advisors, CBO expects that the net effect on discretionary spending over the 2026-2030 period would be negligible, assuming appropriation actions consistent with that authority.

If the SEC increases fees to offset the costs associated with implementing the bill, H.R. 3673 would increase the cost of an existing mandate on private entities required to pay thoseassessments. CBO estimates that the incremental cost of the mandate would be small and would fall well below the annual threshold for private-sector mandates established in the Unfunded Mandates Reform Act (UMRA) ($198 million in 2023, adjusted annually for inflation).

H.R. 3673 contains no intergovernmental mandates as defined in UMRA.

The CBO staff contacts for this estimate are Aurora Swanson (for federal costs) and Rachel Austin (for mandates). The estimate was reviewed by H. Samuel Papenfuss, Deputy Director of Budget Analysis.