On June 22, 2011, the Securities and Exchange Commission (SEC) adopted its final rule (the Family Office Rule) under the Investment Advisers Act of 1940 (the Advisers Act) defining the term “family office” for purposes of the Advisers Act exemption of family offices from the definition of an “investment adviser.”1 The Family Office Rule took effect August 29, 2011.

Congress inserted the family office exemption into the Advisers Act as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), leaving it to the SEC to specify the family offices that would qualify for the exemption. A qualifying family office is altogether exempt from regulation by the SEC and cannot be required to register as an investment adviser by a state, but is subject to state antifraud regulation. Under the Family Office Rule a family office includes any type of qualifying entity that provides investment advice to a single family (as defined by the SEC), including traditional family offices and private trust companies.