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Proposed Order Regarding the SEC’s Performance Fee Rule: Inflation Adjustments to Qualified Client Thresholds
3 June 2016
View Client Update
The SEC has proposed an order making inflation-related adjustments to the dollar amount thresholds in Rule 205-3 under the Investment Advisers Act of 1940, the rule that permits registered investment advisers to charge performance-based fees to “qualified clients.”
The final order, when effective, would maintain the dollar amount of the assets-under-management test at $1,000,000 and would increase the dollar amount of the alternative net worth test from $2,000,000 to $2,100,000.
We will provide an update when the SEC publishes its final order. Private equity fund sponsors should begin to plan to revise their subscription documents to reflect the revised financial criteria.
Kenneth J. Berman
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Julie Baine Stem
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