Page "Hedge fund" Paragraph 82

For SEC registered hedge fund advisers to charge an incentive or performance fee, the investors in the funds must be " qualified clients " as defined in the Investment Advisers Act of 1940 Rule 205 – 3.

To be a qualified client an individual must have US $ 750, 000 in assets invested with the adviser or a net worth in excess of US $ 1. 5 million, or be one of certain high-level employees of the investment adviser.

Under the Dodd-Frank Act, the SEC is required to periodically adjust the qualified client standard for inflation.