Client Alert

SEC Revises Qualified Client Dollar Thresholds for Investment Adviser Performance Fee Rule

February 27, 2012


Recently, the Securities and Exchange Commission announced that it is adopting amendments which will adjust certain dollar thresholds set forth in Rule 205-3 of the Investment Advisers Act of 1940, the rule which permits investment advisers to charge a performance fee to qualified clients. The amendments also: (i) require adjustments of these dollar amount thresholds every five years for inflation, (ii) exclude the value of a persons primary residence and certain associated debt in determining whether a person has sufficient net worth to be considered a qualified client, and (iii) add several transition provisions to the Rule.

The amendments will be effective 90 days after publication in the Federal Register.

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