On October 12, 2010, the Securities and Exchange Commission (“SEC”) released for comment a new proposed Rule 202(a)(11)(G)-1 (the “Proposed Rule”). The Proposed Rule defines what will constitute a “family office” within the meaning of Section 202(a)(11)(G) of the Investment Advisers Act of 1940, as amended (the “Advisers Act”), implemented by Section 409 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Any firm falling within the definition of a family office set forth in the Proposed Rule will be exempt from the definition of “investment adviser” within the meaning of the Advisers Act.

At present, many family offices that would otherwise be required to register under the Advisers Act rely on the so-called “private adviser exemption” from registration as an investment adviser provided by Section 203(b)(3) of the Advisers Act . Title IV of the Dodd-Frank Act eliminates the private adviser exemption, effective July 21, 2011. As a result, such family offices will need to qualify under another exemption or will be required to register as an investment adviser with the SEC or applicable state regulators.