An Eye On The SEC Performance Fee Rule

Law360, New York (June 9, 2011, 12:35 PM EDT) -- On May 10, 2011, the U.S. Securities and Exchange Commission announced its intention to issue an order raising the dollar amounts of the “net worth test” and the “assets-under-management test” contained in Rule 205-3 (the “Rule”) under the Investment Advisers Act of 1940. The Rule sets forth the conditions under which a registered investment adviser may charge a performance-based fee to so-called “qualified clients.”

This proposal responds to directives contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act that the SEC is required to...
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