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If You Manage Investments for a Wealthy Family, a Proposed SEC Rule May Affect You

10.14.10

As contemplated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC proposed a new rule this week that may affect some advisers to family investment portfolios.  A provision in the Dodd-Frank Act, set to take effect on July 21, 2011, exempts a “family office” from registration under the Investment Advisers Act of 1940.  The SEC’s proposed rule would define “family office” to include only those offices that provide financial services to a single family.  Importantly, any office providing investment advice to more than one family would not be exempted under the proposed rule.  The SEC has requested comments on the rule by November 18, 2010.

For additional information on the SEC’s proposed rule, see our Public Securities Alert titled “SEC Proposal Affecting Family Investment Portfolios.”

OUR TAKE:  If you currently manage an investment portfolio for one or more wealthy families, you should consult the SEC’s proposed rule to determine whether your activities would fall within the new exemption from the Investment Advisers Act.  

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