SEC Issues FAQ’s on Family Office Investment Adviser Exemption

By | January 20, 2012

The SEC staff has issued frequently asked questions on the SEC’s rule regarding exemption of family offices from registration under the Investment Adviser Act.  The Dodd-Frank Act required the SEC to adopt this exemption.


Some highlights of the FAQs include:

  • A board comprised of independent board members that are less than a majority does not preclude reliance on the family office exemption.
  • A non-family client owning non-voting shares would cause the office to lose its qualification as a family office under the rule.
  • The key employee definition does not include key employees of a family-owned operating company that is not a family office.
  • In-laws do not qualify as family members when they are related through the spouse of the common ancestor or through spouses or spousal equivalents that are family members.
  • The definition of family member does not include descendants of a stepchild whose parent later divorced the family member stepparent.
  • Examples of spousal equivalents include same-sex domestic partners as well as opposite sex partners that have determined not to marry even though they live together in a relationship generally equivalent to married couples.
  • Activities such as providing non-advisory services (such as catering, tax filing, accounting, housekeeping) to non-family members do not affect the determination of whether or not the family office may rely on the rule.  However, advisory services cover a broad range of activities and a family office should consider carefully whether any of the services it provides to non-family members are advisory services that make it subject to the Advisers Act.


Check frequently for updates on the Dodd-Frank Act and other important securities law matters.

Contact Jill Radloff for more information.