SEC Final Rule: Family Offices

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Gavel.png FINAL RULE: Family Office Definition approved at SEC Open Meeting, June 22, 2011
Dodd-Frank Timeline, Family Office Definition
Comment Deadline Final Rule Issue Effective Date
November 18, 2010 June 29, 2011 August 29, 2011

On June 22, 2011, the U.S. Securities and Exchange Commission (SEC) finalized a rule defining “family offices." This term will thus be excluded from the definition of an investment adviser under the Advisers Act and will not be subject to regulation under the Advisers Act. Historically, family offices (entities established by wealthy families for the purposes of private wealth management) have been structured to take advantage of the exemption from registration under section 203(b)(3) of the Advisers Act for any adviser that during the course of the preceding 12 months had fewer than 15 clients and neither held itself out to the public as an investment adviser nor advised any registered investment company or business development company.[1]

Final Rules

Under the new rules, companies (otherwise known as family offices) that fit the following parameters will be excluded from Advisers Act regulation:

  • "Provides investment advice only to 'family clients,' as defined by the rule.
  • Is wholly owned by family clients and is exclusively controlled by family members and/or family entities, as defined by the rule.
  • Does not hold itself out to the public as an investment adviser."

Family offices that do not meet the terms of exclusion must register with the SEC under the Advisers Act or with the appropriate state authorities by March 30, 2012. Family offices that are excluded from the definition under the Advisers Act must obtain an SEC exemptive order or register as an investment adviser. The new rules also put a grandfathering provision in place for offices that provide investment advice to certain clients prior to January 1, 2010.

Final rules were added to the Federal Register on June 29, 2011.


  1. SEC Adopts Rule Under Dodd-Frank Act Defining “Family Offices”. SEC. Retrieved on June 22, 2011.

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