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ARTICLE · 01 JUNE 2026

SEC's Updated Qualified Client Standards Take Effect 29 June 2026

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The United States Securities and Exchange Commission’s (SEC) inflation adjustment to the qualified client thresholds under Rule 205-3 of the Investment Advisers Act of 1940 will become effective on 29 June 2026...

United StatesFinance and Banking
Sasha Burstein
Sasha Burstein
Pablo Man
Pablo Man
Mark Heine
Mark Heine
Ed Dartley
Ed Dartley
George Zornada
George Zornada

The United States Securities and Exchange Commission’s (SEC) inflation adjustment to the qualified client thresholds under Rule 205-3 of the Investment Advisers Act of 1940 will become effective on 29 June 2026, and will carry important implications for SEC-registered investment advisers (RIAs) that charge performance-based compensation tied to capital gains or investment appreciation.

Under the revised thresholds, a client or private fund investor must satisfy one of the following tests for an RIA to charge performance fees:

  • At least US$1.4 million in assets under management with the adviser immediately after entering into the advisory relationship (increased from US$1.1 million); or
  • A net worth exceeding US$2.7 million, excluding the value of the individual’s primary residence and certain related debt (increased from US$2.2 million)

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