The SEC recently provided guidance in response to questions received from firms that operate as a single advisory business through related investment advisers (formed as separate legal entities and together, a Firm) regarding the aggregation of investments of certain investors to determine whether such investors are “qualified clients” as defined in Rule 205-3 of the Advisers Act.

Specifically, clarification was requested on how to treat investors that made investments into more than one separate private fund, where each fund was advised by separate, but related, investment advisers. The SEC confirmed that it would not object if an investment adviser aggregated an investor’s investments in all private funds advised by the related investment advisers that comprise a Firm to determine whether the investor has reached the $1,000,000 threshold necessary to be deemed to be a “qualified client.” The full text of the guidance may be found here.