Aug 1, 2006 12:00 PM

Kimberly Clouse, president, Hale and Dorr Capital Management LLC, Boston

Many family offices are paying close attention to the Securities and Exchange Commission's efforts to register and regulate hedge fund advisors. That's because last year, the SEC declined to treat an investment entity created for a family office differently from any other investment entity — such as a hedge fund — for purposes of Rule 203(b)(3)-2 under the Investment Advisers Act of 1940 (Advisers Act).¹

Rule 203(b)(3)-2 treats investors in hedge funds as “clients” of fund managers and requires hedge fund managers with at least 15 clients to register with the SEC.² By keeping track of hedge fund advisors,³ the SEC had hoped to gather information about hedge funds and monitor potential fraudulent or deceptive practices. But this June, the U. S. Court of Appeals for the D.C. Circuit in Goldstein v. SEC⁴ struck a blow to the SEC's power to regulate hedge funds, ruling that the commission had exceeded its authority by treating investors in a hedge fund as “clients.” It is generally believed that the SEC is not likely to seek additional review by the D.C. Circuit or seek review by the Supreme Court. As a result, family offices can return to treating each of their proprietary limited partnerships and similar entities as a single “client.”

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

Poll

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

Click here to download the 2011 Trust Glossary

50 Years Ago This Month

Click here to read the issue.

50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

Click here to view the most up to date guide (September 2011)

Press Releases