Family offices and hedge funds don’t have an awful lot in common, except that they both tend to be small outfits. That has meant that both of them have, until now, tended to fall outside the clutches of the Securities and Exchange Commission, the American financial regulator.
But these days small no longer means irrelevant and most people agree that hedge funds, however many they employ, ought to be regulated.
The new, wide-ranging Dodd-Frank Act will therefore scrap the old 15-or-less rule, bring hedge funds under its auspices and introduce a new rule explicitly exempting family offices. There has been much head-scratching in family offices about exactly what will be classed as a family office. As of 29 August, we now know.