The purpose of this paper is to explain the SEC's new dollar threshold tests under the qualified client standard.
The paper explains the amendments to the dollar thresholds, which provide for inflation adjustments to the assets under management and net worth tests every five years; the exclusion of net equity in the primary residence from the net worth calculation; and certain transitional provisions designed to allow investment advisers and their clients to maintain performance fee arrangements that existed when they entered into advisory contracts.
The paper finds that these increased dollar thresholds codify the increased thresholds that the Commission issued in its July 12, 2011 order as required by the Dodd‐Frank Act.
The paper provides practical guidance from an experienced financial services lawyer.
