# kaal:claim:2337268-030

**Claim.** 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.

**Type.** mechanism  **Support.** argued

**Holds when.**

- net-worth test for qualified client status under the IAA

**Source quote.**

> 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, page 18

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

**Verify.** sha256 of source PDF `7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202013%20-%20Investment%20Adviser%20Regulation.pdf

**Topics.** risk-and-incentives

**Keywords.** qualified-clients, net-worth-test, primary-residence, performance-fees, risk-bearing-capacity

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.