The SEC has issued a final order increasing the dollar-amount thresholds for net worth and assets under management that clients must meet to be deemed qualified clients.
As discussed in a client alert written by our Investment Management team, federally registered and some state registered investment advisers are prohibited from receiving performance-based compensation—including carried interest, incentive allocations, and performance fees—from a client unless the client paying such compensation (or, if the client is a private fund, the investors in the private fund) satisfies the criteria to be a qualified client. These criteria include, among others, the net worth of the client and the amount the client has under the investment adviser’s management.
Investment advisers should review the new thresholds for these criteria and update client intake and subscription documents prior to the effective date of the change, which is June 29, 2026.
Click here to read the full Client Alert.