Generally, an investment adviser may not charge carried interests to investors. However, there are two exceptions to this general prohibition.
Generally, an investment adviser may not charge carried interests to investors. However, there are two exceptions to this general prohibition:
- If the investor is a qualified client;
- If the investor is an accredited investor in a VC fund;
Since secondary transactions are not considered as qualifying VC funds, then advisers must rely on the first exception if it wants to charge carried interests to its investors.
Please note that this content is for information purposes only. We cannot advise clients on how these general rules apply to their specific instances and advise customers to consult counsel for guidance specific to their circumstances.