New Family Office Regulations- Kleinberg, Kaplan, Wolff & Cohen, P.C.

In 2012, the U.S. Securities and Exchange Commission (the “SEC”) adopted the term “family office” and excluded such entities from registration as an “investment adviser” under the Investment Advisers Act of 1940,as amended. Rather than take the same approach by adopting a regulatory exclusion, the CFTC provided relief from registration as a CPO or CTA on terms similar to the SEC’s “family office” exclusion through a series of no-action letters.

The CFTC’s current amendments codify the relief granted in the Family Office No-Action Letters. To further the harmonize CFTC and SEC rules, a CPO will be exempt if pool interests are exempt from registration under the Securities Act of 1933 (the “Securities Act”), such interests are sold only to “family clients”[4], the CPO qualifies as a “family office”, and the CPO reasonably believes, at the time of the investment (or at the time of conversion for an existing pool converting to a family office), that each participant in the pool is a “family client” of the “family office.”[5] Note that an exempt CPO will still be required to make and keep all books and records prepared in connection with its activities as the operator of the family office for a period of five years from the date of preparation.

Additionally, a person is exempt from registering as a CTA if the person directs commodity trading advice solely to, and for the sole use of, “family clients.”

An exempt CPO or CTA will not be required to file a notice of exemption with the National Futures Association or the CFTC to claim either of these family office exemptions.

The Family Office No-Action Letters will be superseded once the amended regulations go into effect on January 9, 2020. As a result, a CPO or CTA relying on the Family Office No-Action Letters should create and maintain an internal record documenting the relevant new exemption it wishes to claim, as well as its qualification for such exemption.

If you have any questions, please contact Michael Rosenblatt at 212-971-0033 or

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