Family Offices Clear One More Regulatory Hurdle
Date:
Dec 8, 2014
(1) has no clients other than family clients;
(2) is wholly owned by family clients and exclusively controlled (directly or indirectly) by one or more family members and/or family entities; and
(3) does not hold itself out to public as an investment advisor
Subsequently, the U.S. Commodity Futures Trading Commission (CFTC) in November, 2012, exempted family offices fitting the above definition from registration as a commodity pool operator “CPO”. This relief was granted on the basis that “Family offices are not operations of the type and nature that warrant regulatory oversight by the Commission and that a family office is comprised of participants with close relationships, [and have] a direct relationship between the clients and the advisor.”
On November 5, 2014, the Director of the Division of Swap Dealer and Intermediary Oversight issued a ”no-action relief letter” stating that family offices would be exempt from registration as a commodity trading advisor (CTA) as well, based on the same reasoning as the earlier CPO letter. The relief is not automatic, however. Family offices must file a claim electing the relief. Specifically, the claim of no-action relief must:
(1) State the name, main business address, and main business telephone number of the
Family Office claiming the relief;
(2) State the capacity (i.e., CTA) and, where applicable, the name of the pool(s), for which
the claim is being filed;
(3) Be electronically signed by the Family Office; and
(4) Be filed with the Division using the email address dsionoaction@cftc.gov with the subject line “Family Office CTA Relief.”
No deadline was listed for filing the exemption claim.
Thanks to Perkins Coie, Sidley Austin, the Private Investor Coalition, and the CFTC for materials used in preparing this blog.