SEC Enacts New Rule Defining ‘Family Offices’ under Dodd-Frank Act

WASHINGTON, D.C. - (Mealey's) On June 22, the Securities and Exchange Commission approved a new rule pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act that defines "family offices" that will be excluded from the Investment Advisers Act of 1940,  according to an SEC press release.

According to the press release, "'[f]amily 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."

Upon the enactment of the Dodd-Frank Act, this exemption was removed "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," according to the press release.

"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."

According to the press release, the new rule will become effective 60 days after its publication in the Federal Register.

A copy of the press release and an accompanying fact sheet are available online at http://www.sec.gov/news/press/2011/2011-134.htm.

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