Investment Fund Law Blog
SEC Release No. IA-6961 (issued April 28, 2026, attached) adjusts the “qualified client” dollar thresholds under Rule 205-3 of the Investment Advisers Act of 1940 for inflation. Effective June 29, 2026, the new thresholds increase to $1,400,000 for assets-under-management and $2,700,000 for net worth.
Key Details of IA-6961
- Purpose: The Dodd-Frank Act requires the SEC to adjust qualified client thresholds for inflation every five years, rounded to the nearest $100,000.
- New Thresholds (Effective 6/29/2026):
- Assets-Under-Management Test: Greater than or equal to $1,400,000.
- Net Worth Test: Greater than or equal to $2,700,000) (including joint assets with spouse).
- Applicability: These thresholds apply to performance-based fee contracts, typically used by registered investment advisers for private funds and wealthy clients.
- No Retroactive Application: The new thresholds apply to contracts entered into on or after June 29, 2026, and not retroactively to existing clients.
- Action Required: Please update investor subscription documents, questionnaires, and onboarding procedures going forward.