SEC Slightly Increases Dollar Amount Thresholds for “Qualified Client”

7th July 2021

The Securities and Exchange Commission (“SEC”) has slightly adjusted the dollar amount thresholds for assets-under-management and net worth tests for a “qualified client”. Registered investment advisers have generally been prohibited from charging a client a performance fee unless the client is a qualified client, defined to include a client with (a) at least $1 million under management with the investment adviser or (b) a net worth of more than $2.1 million (the “net worth test”). The SEC has issued an Order increasing the assets-under-management threshold to $1.1 million and the net worth test to $2.2 million. The Order will be effective as of August 16, 2021.