Staff Rejects No-Action Request to Expand Family Office Exemption
The staff of the Division of Investment Management has declined to give no-action relief to allow a non-family member to give investment advice to several family offices without registering as an investment adviser. The no-action request noted that the individual would engage in no other activities other than advising several unrelated single family offices. The request argued that Rule 202(a)(11)(G)-1 does not specifically exclude one individual from advising several family offices so long as the family offices only had family clients, and he did not hold himself out as an investment adviser. The staff rejected these arguments by questioning how the arrangement would not essentially create a multi-family office.
OUR TAKE: While this particular request was not particularly persuasive, we think the staff will not be very receptive to requests that seek to broaden the single family office exemption from Advisers Act registration. In fact, the staff has been generally unreceptive to no-action request seeking to avoid registration.