Blogs

Are More “Family Offices” on the Horizon?

08.01.11

We previously discussed the SEC’s adoption of new rules with respect to exemptions from investment adviser registration.  The new rules replace the old “private adviser exemption” with a new set of exemptions.  One of the new exemptions—actually an exception from the definition of “investment adviser”—is for entities that are “family offices” as defined in the new rules.

Bloomberg reported last week that George Soros is returning money to outside investors in his $25.5 billion hedge fund.  Soros is making the move so the firm will qualify as a family office and not be subject to SEC registration beginning in March 2012.  Although, as The Wall Street Journal noted, Soros helped “pioneer the modern hedge fund,” outside investors represent only a small percentage of his own firm today.

The Soros move highlights the potential impact of the change in registration requirements, which was dictated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

OUR TAKE:  The new requirements impose registration on a larger number of previously exempt advisory firms.  A traditional hedge fund—built on a model of attracting outside investors—would not consider a family office as a viable alternative to avoid registration.  However, there are large, “captive” hedge funds with minority outside investors that, like the Soros entity, have already made the move or may consider becoming only a “family office.”

The publications contained in this site do not constitute legal advice. Legal advice can only be given with knowledge of the client's specific facts. By putting these publications on our website we do not intend to create a lawyer-client relationship with the user. Materials may not reflect the most current legal developments, verdicts or settlements. This information should in no way be taken as an indication of future results.

Search Tips:

You may use the wildcard symbol (*) as a root expander.  A search for "anti*" will find not only "anti", but also "anti-trust", "antique", etc.

Entering two terms together in a search field will behave as though an "OR" is being used.  For example, entering "Antique Motorcars" as a Client Name search will find results with either word in the Client Name.

Operators

AND and OR may be used in a search.  Note: they must be capitalized, e.g., "Project AND Finance." 

The + and - sign operators may be used.  The + sign indicates that the term immediately following is required, while the - sign indicates to omit results that contain that term. E.g., "+real -estate" says results must have "real" but not "estate".

To perform an exact phrase search, surround your search phrase with quotation marks.  For example, "Project Finance".

Searches are not case sensitive.

back to top