Family Office Structuring And Operating Pitfalls: Observations From The Field

Family offices that meet certain criteria are excluded from registration with the U.S. Securities and Exchange Commission ("SEC") as an investment adviser ("Family Office Exclusion"). Registration with the SEC involves significant regulatory burdens, including compliance with the Investment Advisers Act of 1940 ("Advisers Act"), reporting and periodic examination by the SEC. Is your family office properly structured to ensure it is, and will continue to be, excluded from required registration with the SEC as an investment adviser? Are you confident that is the case?

The Family Office Exclusion was created in 2011 by Rule 202(a)(11)(G)-1 ("Family Office Rule") of the Advisers Act pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Family Office Rule, despite appearing at first glance to be straightforward in nature, is both nuanced and complex.