WilmerHale
MONTH-IN-BRIEF (Jun 2026)
New Thresholds for “Qualified Client” Became Effective
By Karen Liu, Reid & Wise LLC, and Vineet Mehmi, J.D. Candidate at UC Law San Francisco
Effective as of June 29, 2026, an investor needs to meet higher thresholds for managed assets or net worth in order to qualify as a “qualified client” under Rule 205-3 of the Investment Advisers Act of 1940, as amended (“Advisers Act”), if such investor is not a “qualified purchaser” defined under the Investment Company Act of 1940.
Rule 205-3 provides an exemption from Advisers Act Section 205(a)(1) (which generally restricts registered investment advisers (“RIAs”) from charging compensation based on a share of capital gains on, or capital appreciation of, a client’s funds), to the extent that such client is a “qualified client” defined under Rule 205-3(d)(1).
