Thu, Oct 6, 2022
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: SEC updates rule on performance fees

Tuesday, June 29, 2021

By: Anthony Drenzek, Robert Plaze

On June 17th, the Securities and Exchange Commission issued an order adjusting the dollar amount thresholds for clients of registered advisers to be "qualified clients" under rule 205-3 of the Investment Advisers Act of 1940, and thus permitted to pay a "performance fee" under the rule. The Order amends rule 205-3(d)(1) to increase the assets-under-management test from $1,000,000 to $1,100,000, and the dollar amount of the net worth test from $2,100,000 to $2,200,000. The Order will be effective on August 16, 2021.

Section 205 of the Advisers Act generally prohibits a registered investment adviser from entering into or renewing any investment advisory contracts with a client that provides for compensation to the adviser based on a share of capital gains on, or capital appreciation of, the account of a client (a "performance fee"). Both hedge fund performance fees and private equity fund carried interest allocations are forms of performance fees covered by Section 205. Rule 205-3 provides an exemption from the general performance-based fee prohibition for advisers to private funds whose investors (typically limited partners) are "qualified clients" meeting the financial thresholds.

This adjustment was made pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which amended section 205(e) of the Advisers Act to require the Commission to adjust for the effects of inflation the dollar amount thresholds included in......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: This European mezzanine debt strategy offers equity-like returns with downside protection[more]

    B. G., Opalesque Geneva for New Managers: Mezzanine financier SIG-i operates in a relatively uncrowded space by proactively manufacturing financing solutions as an alternative to traditional debt and equity instrume

  2. Opalesque Video: Systematic Japan strategy follows the 'Keep it Simple' rule[more]

    B. G., Opalesque Geneva: For those looking to invest in the current opportunities underlying managed futures in Japan, here is a strategy that does just that, with the benefits of leverage, shorts, Big Data, proprietary technology, and academic research on market psychology. K2Q Capital'

  3. Opalesque Exclusive: Castle Hall's DiligenceExchange free Transparency Reports cover 100 managers with $10tn of assets[more]

    Matthias Knab, Opalesque for New Managers: Managers and investors can get free access to DiligenceExchange here: https://bit.ly/DXCInfo Castle Hall, the Du

  4. Opalesque Exclusive: How blockchain is helping the small guy invest in hedge funds[more]

    B. G., Opalesque Geneva: ADDX, Asia's largest private market exchange, is on a mission to democratise the private capital markets through blockchain and smart contract technology. With these technologies, the exchange can eliminate manual interven

  5. Opalesque Exclusive: Japan quant strategy uses academia as starting point of investment research[more]

    B. G., Opalesque Geneva: Shin Samurai is a thorough systematic Japan macro strategy, which takes advantage of behavioural biases by using mathematical and statistical techniques. It also relies heavily on academic research for idea generation, and combines the said research with a deep understand