SEC proposes broader performance fees for accredited investors and funds

The SEC proposed letting investment advisers charge performance fees to more clients and to registered funds under new conditions.

For individuals and companies, the agency would add accredited investors to the qualified-client definition and remove the separate assets-under-management test.

For registered investment companies and business development companies, performance compensation could not exceed 20 percent of net gains. The fund would have to meet governance standards, and its board, including a majority of independent directors, would need to find the arrangement in shareholders' best interests.

The proposal also requires separate fee disclosure. It is not in force. Comments will remain open for 60 days after Federal Register publication.