June 2011

SEC Adopts Rule Defining Family Offices under the Dodd-Frank Act

On Wednesday, June 22, 2011, the Securities Exchange Commission (SEC) adopted a new rule that excludes family offices from the Investment Advisers Act of 1940. The details of this new rule is available on the SEC’s website: Adopted rules defining “family office” (June 22, 2011) [§409].  

Below is an excerpt from the SEC’s release regarding the new rule:

“Family offices” are entities established by wealthy families to manage their wealth and provide other services to family members, such as tax and estate planning services. Historically, family offices have not been required to register with the SEC under the Advisers Act because of an exemption provided to investment advisers with fewer than 15 clients. 

The Dodd-Frank Act removed that exemption so the SEC can regulate hedge fund and other private fund advisers. However, Dodd-Frank also included a new provision requiring the SEC to define family offices in order to exempt them from regulation under the Advisers Act.

The new rule adopted by the SEC enables those managing their own family’s financial portfolios to determine whether their “family offices” can continue to be excluded from the Investment Advisers Act.

Read the detailed release from the SEC: SEC Adopts Rule Under Dodd-Frank Act Defining “Family Offices.”

Watch SEC Chairman Mary L. Schapiro discuss this new rule: Windows Media Player video.

For further information please contact Mark Blumenthal at  mblumenthal@BlackmanKallick.com or 312-980-2917, Brian Carter at  bcarter@BlackmanKallick.com or 312-980-2994, or your Blackman Kallick representative.