For years, private fund managers have understood the $150 million threshold as the line that determines whether a firm may remain an exempt reporting adviser (ERA) or must register as a registered investment adviser (RIA). That standard may be poised for change.
On June 3, 2025, Representatives Andy Barr and Nydia Velázquez introduced a bipartisan bill, House Rule (HR) 3673, the Small Business Investor Capital Access Act, that would revise how the threshold is calculated under Section 203(m) of the Investment Advisers Act of 1940.
HR 3673 introduces an inflation adjustment mechanism for ERAs relying on the private fund exemption:
To put this in perspective: when the threshold was set in 2010, the CPI was 217.6. As of June 2025, it had risen to 322.5, representing a nearly 50% increase. That suggests the filing threshold could see a meaningful increase if the bill becomes law.
If HR 3673 passes, private fund managers will want to carefully evaluate how it impacts their compliance strategy:
Of course, any decision to move from RIA to ERA status should be made carefully and in consultation with legal or regulatory advisers.
As of July 22, 2025, the bill has advanced from the House Committee on Financial Services to the full House of Representatives for consideration. While still early in the process, its potential impact is clear. The longstanding $150 million dividing line may no longer be the standard.
At Petra Funds Group, we’ll continue monitoring HR 3673 and other regulatory developments that affect private fund managers. The compliance landscape is evolving, and understanding where your firm stands and where it’s headed is key to staying prepared.
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