UpFront » May 2026

Section 205(a)(1) of the Investment Advisers Act of 1940 (“Advisers Act”) prohibits the use of performance-based fees for separately managed accounts (SMAs). However, an exemption exists under Advisers Act Rule 205-3 for accounts of “qualified clients” as that term is defined. A qualified client must meet certain asset thresholds under management or have a high net worth. The Dodd-Frank Act amended Section 205(e) of the Advisers Act to provide for an inflationary adjustment to the…