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U.S. Securities and Exchange Commission

Speech by SEC Chairman:
Statement at SEC Open Meeting: Item #3 – Family Offices


Chairman Mary Schapiro

U.S. Securities and Exchange Commission

Washington, D.C.
June 22, 2011

Next, we will consider adopting a new rule regarding the definition of “family office.”

In particular, the rule would enable those managing their own family's financial portfolios to determine whether their "family offices" can continue to be excluded from the Investment Advisers Act.

Family offices are entities established by wealthy families to manage their money and provide tax and estate planning and similar services.

Historically, such family offices have not been required to register with the SEC under the Advisers Act because of an exemption provided to investment advisers with fewer than 15 clients. The Dodd-Frank Act removes that exemption to enable the SEC to regulate hedge fund and other private fund advisers. But, at the same time, the law included a new provision requiring the SEC to define family offices in order to exempt them from regulation under the Advisers Act.

The rule we plan to adopt today is premised on a desire to appropriately limit what constitutes a family office. That is why our rule states that a family office is one that provides services to family clients and other entities such as trusts and charities that are alter-egos of family clients, but were established for tax reasons, estate planning or administrative ease.

We benefited greatly from the comments we received on our proposed definition. In the end, I believe we have crafted a more workable and effective rule, as a result of their input.

I will now turn it over to Sarah ten Siethoff, who worked tirelessly on this rule, to give us an overview of the details of the family office definition. However before I do that, I would like to thank Eileen Rominger, Bob Plaze and Vivien Liu, who worked alongside Sarah in the Division of Investment Management.

This group was assisted by Mark Cahn, Meridith Mitchell, David Blass, Michael Conley, Lori Price and Benjamin Schiffrin in the Office of the General Counsel, and Craig Lewis, Jonathan Sokobin, Bruce Kraus, Harvey Westbrook, and Chuck Dale in the Division of Risk, Strategy, and Financial Innovation.



Modified: 06/22/2011