In The Snows of Kilimanjaro, Ernest Hemingway wrote: “„The very rich are different from you and me.? And how someone had said to Julian, „Yes, they have more money.?” That is certainly true in the case of the families described in the Securities and Exchange Commission?s recently proposed family office rule.

According to the SEC, “family offices” are established by wealthy families to manage their riches, plan for the future and provide other services for family members. According to this article by Pamela Black, “[s]ingle-family offices generally range in size from $51 million to 2.1 billion”. Although family offices generally meet the definition of “investment adviser” under the Investment Advisers Act of 1940, many family offices have relied on the exemption in § 203(b)(3) of the Advisers Act. That section exempts advisers from registration if they have fewer than 15 clients and meet certain other requirements. The Dodd-Frank Wall Street Reform and Consumer Protection Act repeals the 15-client exemption in § 203(b)(3) effective July 21, 2011. However, Section 409 of the Dodd-Frank Act creates a new exclusion in § 202(a)(11)(G) pursuant to which family offices, as defined by the SEC, are not investment advisers subject to the Advisers Act. The SEC?s proposal rule would define “family office” for this purpose.