Order Approving Adjustment for Inflation of the Dollar Amount Tests in Advisers Act Rule 205-3

SEC Release No. IA-3236

July 12, 2011

The SEC published an order to adjust the asset and investment tests in Advisers Act Rule 205-3, regarding when an adviser can enter into an advisory contract providing for compensation based on share of capital gains on, or capital appreciation of, the funds of a client. Previously, the rule required investors to have at least $750,000 under management with the adviser and a net worth of at least $1.5 million. The order changes those figures to $1 million and $2 million, respectively. The change becomes effective on September 19, 2011.

Cross References

Advisers Act Rule 205-3

Advisers Act § 205(a)(1)

Dodd-Frank § 418

SEC Release No. IA-3198 (proposal)