# What This Bill Does

This bill changes the rules for how wealthy families manage their money. Right now, family offices—private investment companies that manage money exclusively for one rich family—are almost completely exempt from government oversight. This bill would bring some of the larger ones under federal regulation for the first time.

Here's the practical impact: Currently, any family office, no matter how large or risky, can operate without registering with the Securities and Exchange Commission (SEC) or following most investment adviser rules. This bill would draw a line at $750 million in assets. Family offices managing less than that amount would still get an exemption and avoid most regulations. But family offices managing $750 million or more would have to register and follow the same rules as other investment advisers—meaning they'd have to keep records, report to the SEC, and follow standards designed to protect investors. The SEC could also require even smaller family offices to register if they're taking on excessive risk or using lots of borrowed money.

The bill also removes a special provision from the 2010 financial reform law that allowed some very large family offices to operate without regulation. Additionally, it would exclude anyone with a history of securities violations from claiming the family office exemption, closing a loophole that previously allowed bad actors to hide behind the family office label.

In practical terms, this mainly affects ultra-wealthy families with hundreds of millions of dollars to invest. For ordinary people, the impact is indirect but potentially important: it means the SEC would have better visibility into how some of the largest pools of private wealth are being invested, which could help prevent financial schemes or risky behavior that might eventually affect broader markets.

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.

Ocasio-Cortez, Alexandria

 <p>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. </p> <p>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.</p>