Small Entity Update Act
- Bill Number
- H.R. 3382
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Finance and Financial Sector
- Status
- Passed House
- Latest Action
- 2025-07-22: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- Last Updated
- 2026-07-11T01:08:23Z
AI-Generated Summary
Summary of H.R. 3382: Small Entity Update Act
Purpose
This legislation aims to modernize the Securities and Exchange Commission's (SEC) definition of a "small entity" under U.S. securities laws. It ensures that the definition aligns with the goals of the Regulatory Flexibility Act (RFA), which requires federal agencies to consider the impact of regulations on small businesses and other small entities to minimize unnecessary burdens. By updating the definition, the Act seeks to include more entities that qualify for lighter regulatory treatment.
Key Provisions
- Definitions:
- "Commission" refers to the SEC.
- "Small entity" is defined based on Section 601 of Title 5, U.S. Code (part of the RFA), including small businesses, small organizations, small governmental jurisdictions, or small entities as they apply to SEC activities.
- Studies and Reports:
- The SEC must conduct a study within 1 year of enactment, and every 5 years thereafter.
- Each study evaluates:
- How the current "small entity" definition aligns with the RFA's original intent to protect small entities from overly burdensome rules.
- Growth in U.S. financial markets since the last SEC update to the definition.
- Ways to define "small entity" so that a meaningful number of entities qualify.
- The SEC must submit a report to Congress after each study, including results and detailed recommendations to amend the definition for consistency with study findings and to expand coverage.
- Rulemaking:
- Following each study (with public notice and comment), the SEC must revise its rules to reflect the study's results.
- Inflation Adjustments:
- After issuing final rule revisions, the SEC must adjust any dollar-based thresholds in the "small entity" definition every 5 years to account for inflation, using the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics.
Significant Changes to Existing Law
- The Act introduces mandatory periodic reviews and updates to the SEC's "small entity" definition, which has not been significantly revised to match economic growth or inflation in recent years.
- It requires the SEC to proactively expand the definition's scope, potentially increasing the number of qualifying entities compared to the current, outdated thresholds.
- Unlike prior law, which left updates discretionary, this makes studies, reports, rulemaking, and inflation adjustments obligatory and recurring.
Potential Impacts
- On Government Agencies: The SEC will face new administrative requirements for studies, reports, and rule revisions, increasing workload but promoting more tailored regulations. This could reduce regulatory burdens on small entities, allowing the SEC to focus enforcement on larger players.
- On Citizens and Businesses: Small businesses, organizations, and local governments involved in securities activities (e.g., issuing securities or complying with SEC rules) may benefit from expanded exemptions or simplified compliance under the RFA, lowering costs and easing market entry. Larger entities might see minimal direct impact.
- On International Relations: No direct effects, as the Act focuses on domestic U.S. securities regulation and does not address foreign entities or cross-border issues.
Main Stakeholders Affected
- Securities and Exchange Commission (SEC): Primary implementer, responsible for conducting studies, issuing reports, and updating rules.
- Small Entities: Includes small businesses (e.g., startups issuing securities), small organizations (e.g., nonprofits), and small governmental jurisdictions (e.g., local governments) regulated by the SEC; they stand to gain from broader protections under the RFA.
- Congress: Receives reports and oversees implementation, ensuring accountability.
- Investors and Financial Markets: Indirectly affected through potentially more accessible markets for small issuers, fostering innovation without altering core investor protections.
Notable Legal, Constitutional, or Political Implications
- Legal Implications: Strengthens the RFA's application to securities regulation by mandating evidence-based updates, which could lead to challenges if revisions are seen as insufficiently protective. Public comment periods ensure transparency and due process in rulemaking.
- Constitutional Implications: Aligns with Article I's congressional authority to regulate commerce and impose regulatory flexibility; no apparent conflicts with due process or equal protection, as it promotes fair treatment for small entities.
- Political Implications: Supports bipartisan goals of reducing regulatory burdens on small businesses, potentially appealing to pro-business lawmakers. It may influence future SEC priorities toward economic adaptability without major partisan divides.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (7)
Rep. Torres, Ritchie [D-NY-15], Rep. Casten, Sean [D-IL-6], Rep. Scott, David [D-GA-13], Rep. Sessions, Pete [R-TX-17], Rep. Himes, James A. [D-CT-4], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Lawler, Michael [R-NY-17]
Recent Actions
- 2025-07-22: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- 2025-07-21: Motion to reconsider laid on the table Agreed to without objection.
- 2025-07-21: On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H3500)
- 2025-07-21: Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H3500)
- 2025-07-21: DEBATE - The House proceeded with forty minutes of debate on H.R. 3382.
- 2025-07-21: Considered under suspension of the rules. (consideration: CR H3500-3501)
- 2025-07-21: Mr. Hill (AR) moved to suspend the rules and pass the bill, as amended.
- 2025-06-03: Placed on the Union Calendar, Calendar No. 95.
- 2025-06-03: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-125.
- 2025-06-03: Reported (Amended) by the Committee on Financial Services. H. Rept. 119-125.
- 2025-05-20: Ordered to be Reported (Amended) by the Yeas and Nays: 51 - 0.
- 2025-05-20: Committee Consideration and Mark-up Session Held
- 2025-05-14: Referred to the House Committee on Financial Services.
- 2025-05-14: Introduced in House
- 2025-05-14: Introduced in House
Bill Versions
- Small Entity Update Act — issued 2025-07-21 — PDF (6 pages)
- Small Entity Update Act — issued 2025-05-14 — PDF (4 pages)
- Small Entity Update Act — issued 2025-07-22 — PDF (4 pages)
- Small Entity Update Act — issued 2025-06-03 — PDF (6 pages)