FAMILY OFFICE WITH MORE THAN 15 CLIENTS SEEKS REGISTRATION EXEMPTION
A family office has filed an exemptive application asking for relief from the investment adviser registration requirements because, although the firm will have more than 15 clients, all of the clients will be members of the same family for whom the family office was created. The firm’s clients will exceed 15 because several members of the family will cease to be minors. The firm provides advisory services to members of the family and various trusts and foundations created for family members. The applicant also provides non-advisory management, administrative, and tax services for various single purpose investing entities that may or may not be controlled by family members. The applicant represented that it does not now, nor will it, hold itself out as an investment adviser.
OUR TAKE: As the family office business continues to grow, it will be interesting to see the SEC’s approach to these hybrid investment structures that straddle the worlds of private investing and traditional asset management. We expect that the SEC will grant this exemptive application. We also expect family offices to continue to seek regulatory flexibility even as their “client” rosters grow.