The SEC recently adopted amendments to its final rule to the Advisers Act Rule 205-3, which pertains to performance fees that advisers are allowed to charge to “qualified clients.” These “qualified clients” must have at least $1 million in assets-under-management (AUM) with the adviser, which a change from the previous requirement of $750,000. Also, they must have a net worth of more than $2 million, with the exception of their primary residence and certain debt secured by that property. This is a change from the previous benchmark of $1.5 million in net worth and previously did not distinguish the primary residence as separate.
These new adjustments that are being implemented by the SEC to Rule 205-3 are being put in place due to new thresholds laid out in the Dodd-Frank Act issued on July 12, 2011. Also, the primary residence exclusion from the net worth calculation, is in line with the amendments made to the Regulation D definition of an “accredited investor”.
Contact Cobia today to discuss how these changes will affect your firm and how we can assist you in maintaining your compliance.
Posted on
Fri, February 17, 2012
by Administator