kaal:claim:2337268-030

The SEC excludes the value of a primary residence and related debts from the qualified client net-worth test because persons who clear the threshold only by counting their home are less able to bear the risk of performance fee arrangements.

Source quote, verbatim

Because persons who meet the net-worth test by virtue of including the value of their primary residence are less likely to be able to bear the risk of performance fee arrangements, the SEC excludes the value of a person's primary residence and related debts from the net-worth test.

From

Wulf A. Kaal, Investment Adviser Regulation (2013), 6. Qualified Clients, p. 18
https://ssrn.com/abstract=2337268 · source PDF

Cite as

Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268

Holds when

net-worth test for qualified client status under the IAA

Classification

mechanismsupport: arguedrisk-and-incentives

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