SEC Issues Notice Of Intent To Issue Order To Increase Qualified Client Thresholds

Key Points

• The proposed order would increase the thresholds for permitting registered investment advisers to charge performance-based fees to a minimum net worth of $2.7 million (excluding the primary residence and certain related debt) or a minimum amount of assets under management with that registered investment adviser of $1.4 million.
• Subscriptions documents for private funds relying on Section 3(c)(1) of the Investment Company Act of 1940, as amended, and investment management agreements for certain separately managed accounts would need to be updated by the effective date of the proposed order (if issued) to reflect the new “qualified client” assets-under-management and net worth thresholds.