Investment Adviser Performance-Based Compensation Modernization

What it does

The Securities and Exchange Commission (the "Commission") is proposing to amend the rule under the Investment Advisers Act of 1940 that provides an exemption from the statutory prohibition on registered investment advisers receiving compensation on the basis of a share of capital gains in or capital appreciation of an advisory client's account. Specifically, the proposed amendments would expand the ability of investment advisers to receive this compensation from clients that are registered management investment companies and business development companies (collectively, "regulated funds"), subject to certain conditions. The proposal would relatedly amend certain regulated fund registration and reporting forms to require separate disclosure of all performance-based compensation paid by regulated funds to their investment adviser. The proposed rule amendments would also allow investment advisers to receive this compensation from additional clients by revising the rule's "qualified client" definition to include investors that meet the "accredited investor" definition in Regulation D under the Securities Act of 1933. The proposal would relatedly make conforming amendments to certain other rules under the Investment Advisers Act of 1940 whose provisions reference the "qualified client" definition.

The Securities and Exchange Commission's summary, as published in the Federal Register.

What it would change

4 parts of Title 17 of the Code of Federal Regulations:

17 CFR 239, 17 CFR 249, 17 CFR 274, 17 CFR 275

Wording on eCFR: the day before it took effect and from the day it took effect (first part listed).

Before this

No earlier Federal Register document under regulation identifier 3235-AN59 since Jan. 1, 2025.

What happens next and when

This release was published in the Federal Register on October 6, 2026. Comments should be received on or before December 7, 2026.

The agency's dates, word for word.

Check it yourself

• The document in the Federal Register
• Title 17 on eCFR

The record as published

Source: the Federal Register (public domain). The document in the Federal Register