Supporters of legislation that could ease regulations on small investment advisers hope that getting an earlier start in the new Congress will help get the measure over the finish line.
Earlier this month, Rep. Michael San Nicolas, D-Guam, vice chairman of the House Financial Services Committee, introduced a bill that would require the Securities and Exchange Commission to consider alternatives for defining a "small business" when assessing the impact of regulations on investment advisers.
Currently, the SEC uses assets under management as a metric for determining whether an advisory firm is small. Under the bill, the SEC could instead consider the firm's number of employees. Such a change could expand the number of advisory firms deemed "small" and could lead to the SEC tailoring regulations so that they are less costly for advisers in that category.
The bill is identical to the Investment Adviser Regulatory Flexibility Improvement Act introduced last July by Rep. Gwen Moore, D-Wisc., according to Brian Patrick, spokesman for Rep. Bill Huizenga, R-Mich., ranking member of the House Financial Services Subcommittee on Investor Protection Entrepreneurship and Capital Markets. Mr. Huizenga is the lead GOP sponsor on Mr. San Nicolas' bill.
Ms. Moore's bill gained overwhelming bipartisan House approval but died when the Senate did not act on it at the end of the last year. It had to be reintroduced in the new Congress this January. Ms. Moore has since moved to the House Ways and Means Committee.
With the support of Mr. San Nicolas and Mr. Huizenga, the new bill is starting with high-ranking bipartisan support on the financial panel and has a two-year congressional session ahead.
"We think we can foster strong bipartisan support in the House and Senate and get it on the president's desk by getting it out of the gate earlier," Mr. Patrick said. "This is common-sense reform."
The bill is a priority for the Investment Adviser Association, which plans to promote it in meetings with lawmakers and their staff during the organization's Capitol Hill lobbying day next month.
"We're feeling optimistic about its prospects in the House," said Neil Simon, IAA vice president for government relations. "The fact that it has leadership on both sides of the aisle in [the financial services] committee bodes well for favorable consideration on the House floor."
IAA statistics show that 60% of registered investment advisers have 10 or fewer nonclerical employees. Under the Dodd-Frank financial reform law, advisers with more than $100 million in AUM are regulated by the SEC. Those under that threshold are overseen by state regulators.