US Securities and Exchange Commission Issues Proposed Rule on Family Office Exclusion

On October 12, 2010, the U.S. Securities and Exchange Commision (the "SEC") issued Release IA-3098 setting forth its proposed definition of "family office."

On October 12, 2010, the U.S. Securities and Exchange Commission (the "SEC") issued Release IA-3098 setting forth its proposed definition of "family office." In this Briefing Note, we will describe the most significant provisions of the SEC's proposed definition and then highlight what we consider its positive and negative aspects.

Background

As reported in our previous updates, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") eliminates the private adviser exemption under the Investment Advisers Act of 1940 (the "Advisers Act"). Many family offices have relied on this exemption to avoid registration with and regulation by the SEC as an investment adviser. With this change, however, the Dodd-Frank Act adds a "family office" exclusion from the definition of