SEC Adopts Inflation-Based Adjustment to 'Qualified Client' Thresholds for Performance Fees

Short summary

The SEC increased 'qualified client' thresholds for investment advisers effective June 29, 2026: AUM from $1.1M to $1.4M, net worth from $2.2M to $2.7M. These thresholds determine who qualifies to be charged performance fees under Rule 205-3. New requirements apply only to contracts entered after June 29; existing investments are grandfathered, and advisers should amend subscription documents and compliance procedures.

• •AUM threshold increases from $1.1M to $1.4M; net worth from $2.2M to $2.7M effective June 29, 2026
• •New thresholds apply only to new contracts; existing investments are grandfathered
• •Advisers must amend subscription documents, SMAs, and update compliance reviews

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