🚨 Big (potential) news for investment fund managers!

🎉 Happy Friday, funds family!

On September 30, 2026, the SEC 🔗 proposed amendments that would include “Accredited Investors” in the definition of “Qualified Client” – in other words, accredited investors would automatically be qualified clients.

Under the 🔗 Investment Advisers Act (and similar state laws), Registered Investment Advisers (RIAs) can only take performance fees (e.g., carry, promote, incentive allocations) from Qualified Clients.

Per the updates earlier this year, the net worth threshold for Qualified Clients is $2.7 million (as compared to the $1 million net worth threshold for a natural person to be an Accredited Investor). And notably, there is no income test under the current Qualified Client definition, whereas a natural person can qualify as an Accredited Investor based on income alone ($200,000 individually, or $300,000 with a spouse/partner, in each of the two most recent years). If adopted, that Accredited Investor income test would effectively flow through and let income-qualified Accredited Investors be charged performance fees as Qualified Clients.

If adopted, this would meaningfully expand the pool of investors from whom RIAs can charge performance fees.

Thanks for reading, everyone!

Have a great weekend! 🙌

⚠️ Note: This newsletter is for informational purposes only and nothing should be considered legal advice. For that, hire a lawyer! I am a lawyer, but not your lawyer (unless I actually am your lawyer because you’ve signed an engagement letter and we’re working together). This may be considered attorney advertising.