Title: To amend the Investment Advisers Act of 1940 to limit the exemption provided for family offices from the definition of an investment adviser, and for other purposes.
Policy area: Finance and Financial Sector

Summary:
This bill limits the exemption for family offices from the Securities and Exchange Commission's (SEC's) regulations applicable to investment advisers. A family office is a privately held company that manages a single family's wealth. Currently, a family office is generally not considered an investment adviser for purposes of SEC regulation regardless of the amount of managed assets, and is therefore not subject to regulations relating to duties, recordkeeping, and disclosures.
The bill limits the exemption to include only family offices with less than $750 million in managed assets. Furthermore, the SEC must exclude from the exemption certain persons subject to a final order regarding fraudulent conduct, among other activities.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4620 Introduced in House (IH)]

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117th CONGRESS
  1st Session
                                H. R. 4620

  To amend the Investment Advisers Act of 1940 to limit the exemption 
   provided for family offices from the definition of an investment 
                    adviser, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 22, 2021

Ms. Ocasio-Cortez introduced the following bill; which was referred to 
                  the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Investment Advisers Act of 1940 to limit the exemption 
   provided for family offices from the definition of an investment 
                    adviser, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. REGULATION OF FAMILY OFFICES.

    (a) Family Office Size Limitation.--Section 202(a) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended--
            (1) in paragraph (11), by striking ``;; (G) any family 
        office, as defined by rule, regulation, or order of the 
        Commission, in accordance with the purposes of this title'' and 
        inserting ``; (G) any covered family office'';
            (2) by redesignating the second paragraph (29) as paragraph 
        (31); and
            (3) by adding at the end the following:
            ``(32) Covered family office.--
                    ``(A) In general.--The term `covered family office' 
                means a family office with less than $750,000,000 in 
                assets under management.
                    ``(B) Rulemaking.--The Commission shall further 
                define the term `covered family office', by rule, in 
                accordance with the purposes of this title. In issuing 
                such rule, the Commission--
                            ``(i) shall exclude any person who is 
                        subject to a final order described in section 
                        15(b)(4)(H) of the Securities Exchange Act of 
                        1934 (15 U.S.C. 78o(b)(4)(H)); and
                            ``(ii) may include a family office with 
                        fewer assets under management than the 
                        threshold described under subparagraph (A), if 
                        the Commission, by rule, determines the family 
                        office is highly leveraged or engaged in high-
                        risk activities that the Commission determines 
                        warrants inclusion, as appropriate to protect 
                        investors.''.
    (b) Exemption of and Reporting by Covered Family Offices.--Section 
203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) is amended 
by adding at the end the following:
    ``(o) Exemption of and Reporting by Covered Family Offices.--
            ``(1) In general.--The Commission may provide an exemption 
        from the registration requirements under this section to any 
        covered family office.
            ``(2) Reporting.--The Commission shall require investment 
        advisers exempted by reason of this subsection to maintain such 
        records and provide to the Commission such annual or other 
        reports as the Commission determines necessary or appropriate 
        in the public interest or for the protection of investors.''.
    (c) Removal of Grandfather Provision.--Section 409 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (15 U.S.C. 80b-2 
note) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1), by adding ``and'' at the end;
                    (B) in paragraph (2), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking paragraph (3); and
            (2) by striking subsection (c).
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