Start up hedge fund managers should take notice that the Securities and Exchange Commission (SEC) recently adjusted for inflation the dollar-based qualification tests allowing an SEC-registered investment adviser to charge performance fees. Under the new test, compensation based on investment performance may be received only from clients that meet or exceed the new “Qualified Client Test” which has increased the net worth requirement for “Qualified Client” status from $2 million to $2.1 million, effective August 15, 2016. However, the alternative test, which is based on the client’s assets under management with the adviser, was not changed and remains at $1 million under management.