Private Funds

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The U.S. Commodity Futures Trading Commission’s (“CFTC”) Market Participants Division (the “Division”) issued No-Action Letter No. 25-50 (the “No-Action Letter”) on December 19, 2025, effectively temporarily reinstating former CFTC Regulation 4.13(a)(4) (the “QEP Exemption”), which was rescinded by the CFTC in 2012.  The No-Action relief is available until the CFTC promulgates rules addressing the reinstatement of the QEP Exemption.  This No-Action Letter affords options to reduce compliance burdens for a private fund manager that is a registered investment adviser with the Securities and Exchange Commission (“SEC”) that currently is also either registered as a commodity pool operator (“CPO”) with the CFTC or relies on CFTC Regulation 4.13(a)(3) with respect to its commodity interest trading for private funds. 

Beginning on June 29, 2026 (the “Effective Date”), SEC-registered investment advisers charging performance-based fees (e.g. carried interest or performance allocation) and in certain cases exempt reporting advisers[1] (collectively, “Advisers”) must ensure that clients or private fund investors (“Investors”) meet updated “qualified client” thresholds under Section 205-3 of the Investment Advisers Act of 1940 (the “Advisers Act”). In April 2026, the SEC issued a final order that adjusts these dollar thresholds to account for inflation, affecting fee arrangements for many investment advisory relationships. Section 205(a)(1) of the Advisers Act generally prohibits investment advisers from entering into advisory contracts that compensate Advisers with performance-based fees based on a share of capital gains unless their Investors qualify as a “qualified client” under the Advisers Act.