[Federal Register Volume 79, Number 249 (Tuesday, December 30, 2014)]
[Notices]
[Pages 78518-78519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-30435]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IA-3990/803-00214]


William E. Simon & Sons, LLC; New Vernon Advisors, Inc.; Notice 
of Application

December 22, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an exemptive order under section 
202(a)(11)(H) of the Investment Advisers Act of 1940 (``Advisers 
Act'').

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APPLICANT: William E. Simon & Sons, LLC and New Vernon Advisors, Inc. 
(together, the ``Applicant'').

RELEVANT ADVISERS ACT SECTIONS: Exemption requested under section 
202(a)(11)(H) of the Advisers Act from section 202(a)(11) of the 
Advisers Act.
SUMMARY: Summary of Application: The Applicant requests that the 
Commission issue an order declaring it to be a person not within the 
intent of Section 202(a)(11) of the Advisers Act, which defines the 
term ``investment adviser.''

DATES: Filing Dates: The application was filed on June 20, 2012; an 
amended application was filed on April 1, 2014, August 13, 2014, 
November 12, 2014, and December 16, 2014.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving the Applicant with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on January 16, 2015, 2014, and should be accompanied by proof of 
service on the Applicant, in the form of an affidavit or, for lawyers, 
a certificate of service. Pursuant to Rule 0-5 under the Advisers Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, the 
reason for the request, and the issues contested. Persons may request 
notification of a hearing by writing to the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street 
NE., Washington, DC 20549. The Applicant, William E. Simon & Sons, LLC 
and New Vernon Advisors, Inc., c/o James E. Anderson, WilmerHale, 1875 
Pennsylvania Ave. NW., Washington, DC 20006.

FOR FURTHER INFORMATION CONTACT: Michael S. Didiuk, Senior Counsel, at 
(202) 551-6839 or Holly L. Hunter-Ceci, Branch Chief, at (202) 551-6825 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site either at http://www.sec.gov/rules/iareleases.shtml or by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

The Applicant's Representations

    1. The Applicant is a multi-generational single-family office that 
provides services to the family and descendants of William E. Simon. 
The Applicant is wholly-owned by Family Clients and is exclusively 
controlled (directly and indirectly) by one or more Family Members and/
or Family Entities in compliance with Rule 202(a)(11)(G)-1 (the 
``Family Office Rule''). For purposes of the application, the term 
``Simon Family'' means the lineal descendants of William E. Simon, 
their spouses, and all of the persons and entities that qualify as 
Family Clients as defined in paragraph (d)(4) of the Family Office 
Rule. Capitalized terms herein have the same meaning as defined in the 
Family Office Rule.
    2. The Applicant provides both advisory and non-advisory services 
(collectively, ``Services''). Any Service provided by the Applicant 
that relates to investment advice about securities or may otherwise be 
construed as advisory in nature is considered an ``Advisory Service.''
    3. The Applicant represents that: (i) Other than the exception 
discussed in representation 4 below, each of the persons served by the 
Applicant is a Family Client, i.e., the Applicant has no investment 
advisory clients other than Family Clients as required by paragraph 
(b)(1) of the Family Office Rule; (ii) the Applicant is owned and 
controlled in a manner that complies in all respects with paragraph 
(b)(2) of the Family Office Rule; and (iii) the Applicant does not hold 
itself out to the public as an investment adviser as required by 
paragraph (b)(3) of the Family Office Rule. At the time of the 
application, the Applicant represents that Family Members account for 
approximately 89 percent of the natural persons to whom the Applicant 
provides Advisory Services.
    4. The Applicant provides Services to the sibling of a former 
spouse of William E. Simon's lineal descendant (``Former Sister-in-
Law'') as well as a private foundation funded exclusively by this 
sibling (collectively, the ``Additional Family Client''). The Applicant 
represents that if the Former Sister-in-Law were a Family Client, the 
related foundation would meet the requirements of (d)(4)(v) of the 
Family Office Rule.
    5. The Additional Family Client does not have an ownership interest 
in the Applicant. The Applicant represents that the assets beneficially 
owned by Family Members and/or Family Entities (excluding the 
Additional Family Client's Family Entity) make up at least 75 percent 
of the total assets for which the Applicant provides Advisory Services.
    6. The Applicant represents that the Additional Family Client has 
important familial ties to and is an integral part of the Simon Family. 
The Applicant maintains that including the Additional Family Client in 
the ``family'' simply recognizes and memorializes the familial ties and 
intra-familial relationships that already exist, and have existed for 
at least 26 years while the assets of the Additional Family Client were 
managed by the Simon Family.

The Applicant's Legal Analysis

    1. Section 202(a)(11) of the Advisers Act defines the term 
``investment adviser'' to mean ``any person who, for compensation, 
engages in the business of advising others, either directly or through 
publications or writings, as to the value of securities or as to the 
advisability of investing in, purchasing, or selling securities, or 
who, for compensation and as part of a regular business, issues or 
promulgates analyses or reports concerning securities. . . .''
    2. The Applicant falls within the definition of an investment 
adviser under Section 202(a)(11). The Family Office Rule provides an 
exclusion from the definition of investment adviser for which the 
Applicant would be eligible but for the provision of Services to the 
Additional Family Client. Section 203(a) of the Advisers Act requires 
investment

[[Page 78519]]

advisers to register with the SEC. Because the Applicant has regulatory 
assets under management of more than $100 million, it is not prohibited 
from registering with Commission under Section 203A(a) of the Advisers 
Act. Therefore, absent relief, the Applicant would be required to 
register under Section 203(a) of the Advisers Act.
    3. The Applicant submits that its relationship with the Additional 
Family Client does not change the nature of the office into that of a 
commercial advisory firm. In support of this argument, the Applicant 
notes that if the Former Sister-in-Law were the spouse of a lineal 
descendant, rather than the sibling of a former spouse of a lineal 
descendant, there would be no question that each of the persons 
presently being served by the office would be a Family Member, and that 
the related foundation would meet the requirements of paragraph 
(d)(4)(v) of the Family Office Rule pertaining to charitable 
foundations. The Applicant states that in requesting the order, the 
office is not attempting to expand its operations or engage in any 
level of commercial activity to which the Advisers Act is designed to 
apply. Indeed, although the Additional Family Client does not fall 
within the definition of Family Member, she is considered to be, and 
treated as, a member of the Simon Family and the number of natural 
persons who are not Family Members as a percentage of the total natural 
persons to whom the office would provide Advisory Services if relief 
were granted would be only approximately 11 percent. The Applicant 
maintains that, from the perspective of the Simon Family, the Applicant 
seeks to continue providing Advisory Services exclusively to members of 
a single family.
    4. The Applicant also submits that there is no public interest in 
requiring the Applicant to be registered under the Advisers Act. The 
Applicant states that the office is a private organization that was 
formed to be the ``family office'' for the Simon Family, and that the 
office does not have any public clients. The Applicant maintains that 
the office's Advisory Services are tailored exclusively to the needs of 
the Simon Family and the Additional Family Client. The Applicant argues 
that the presence of the Additional Family Client, who has been 
receiving Advisory Services from the office for 26 years, does not 
create any public interest that would require the office to be 
registered under the Advisers Act that is different in any manner than 
the considerations that apply to a ``family office'' that complies in 
all respects with the Family Office Rule.
    5. The Applicant argues that, although the Family Office Rule 
largely codified the exemptive orders that the Commission had 
previously issued before the enactment of the Dodd-Frank Wall Street 
Reform and Consumer Protection Act, the Commission recognized in 
proposing the rule that the exact representations, conditions, or terms 
contained in every exemptive order could not be captured in a rule of 
general applicability. The Commission noted that family offices would 
remain free to seek a Commission exemptive order to advise an 
individual or entity that did not meet the proposed family client 
definition, and that certain situations may raise unique conflicts and 
issues that are more appropriately addressed through an exemptive order 
process where the Commission can consider the specific facts and 
circumstances, than through a rule of general applicability. The 
Applicant maintains that its unusual circumstances--providing Services 
to Family Clients and to an Additional Family Client for the past 26 
years--have not changed the nature of the office's operations into that 
of a commercial advisory business, and that an exemptive order is 
appropriate based on the Applicant's specific facts and circumstances.
    6. For the foregoing reasons, the Applicant requests an order 
declaring it to be a person not within the intent of Section 202(a)(11) 
of the Advisers Act. The Applicant submits that the order is necessary 
and appropriate, in the public interest, consistent with the protection 
of investors, and consistent with the purposes fairly intended by the 
policy and provisions of the Advisers Act.

The Applicant's Conditions

    1. The Applicant will offer and provide Advisory Services only to 
Family Clients and to the Additional Family Client, who will generally 
be deemed to be, and be treated as if she and the related foundation 
were, a Family Client; provided, however, that the Additional Family 
Client will be deemed to be, and treated as if she were, a Family 
Member for purposes of paragraph (b)(1) and for purposes of paragraph 
(d)(4)(vi) of the Family Office Rule.
    2. The Applicant will at all times be wholly owned by Family 
Clients and exclusively controlled (directly or indirectly) by one or 
more Family Members and/or Family Entities (excluding the Additional 
Family Client's Family Entity) as defined in paragraph (d)(5) of the 
Family Office Rule.
    3. At all times the assets beneficially owned by Family Members 
and/or Family Entities (excluding the Additional Family Client's Family 
Entity) will account for at least 75 percent of the assets for which 
the Applicant provides Advisory Services.
    4. The Applicant will comply with all the terms for exclusion from 
the definition of investment adviser under the Advisers Act set forth 
in the Family Office Rule except for the limited exception requested by 
this Application.

For the Commission, by the Division of Investment Management, under 
delegated authority.

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-30435 Filed 12-29-14; 8:45 am]
BILLING CODE 8011-01-P