text: SECTION 1. FINDINGS.
  
      The Congress finds the following:
              (1) Family offices are not of national concern in that 
          their advice, counsel, publications, writings, analyses, and 
          reports are not furnished or distributed to clients on a retail 
          basis, but are instead furnished or distributed only to persons 
          who are members of a particular family.
              (2) Family offices do not hold themselves out to the public 
          as investment advisers.
              (3) Family offices do not engage in the business of 
          advising others, but instead provide a wide range of services 
          to members of the family they serve, only one of which involves 
          investment advice, for which they may receive compensation from 
          the members of the family.
              (4) Since the Investment Advisers Act of 1940 was enacted, 
          the Securities and Exchange Commission has regularly issued 
          orders to individual family offices exempting them from all of 
          the provisions of the Investment Advisers Act of 1940.
              (5) Section 409 of the Dodd-Frank Wall Street Reform and 
          Consumer Protection Act expressly exempts family offices from 
          all of the provisions of the Investment Advisers Act of 1940.
              (6) It was the intent of Congress that section 409 of the 
          Dodd-Frank Wall Street Reform and Consumer Protection Act be 
          interpreted broadly to encompass all family offices as they are 
          currently organized and operated, as well as to encompass 
          changes in the organization and operation of family offices in 
          the future.
  
  SEC. 2. FAMILY OFFICE DEFINITION.
  
      Section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 
  80b-2(a)) is amended--
              (1) in paragraph (11)(G), in the matter added by section 
          409(a) of the Dodd-Frank Wall Street Reform and Consumer 
          Protection Act, by striking ``, as defined by rule, regulation, 
          or order of the Commission, in accordance with the purposes of 
          this title'';
              (2) by redesignating the second paragraph (29), as added by 
          section 770 of the Dodd-Frank Wall Street Reform and Consumer 
          Protection Act, as paragraph (31); and
              (3) by adding at the end the following new paragraph:
              ``(32) Family office.--
                      ``(A) In general.--The term `family office' means a 
                  company (including any director, partner, trustee, or 
                  employee of such company, when acting in their 
                  respective capacities as such) that--
                              ``(i) has no clients other than family 
                          clients;
                              ``(ii) is--
                                      ``(I) owned, directly or 
                                  indirectly, by,
                                      ``(II) controlled, directly or 
                                  indirectly, by, or
                                      ``(III) operated primarily for the 
                                  benefit of,
                          family clients; and
                              ``(iii) does not hold itself out to the 
                          public as an investment adviser.
                      ``(B) Grandfathering.--A person described under 
                  section 409(b)(3) of the Dodd-Frank Wall Street Reform 
                  and Consumer Protection Act, but who otherwise meets 
                  the requirements under subparagraph (A), shall qualify 
                  as a family office.
                      ``(C) Definitions.--For purposes of this paragraph:
                              ``(i) Control.--The term `control' means 
                          the power to exercise a controlling influence 
                          over the management or policies of a company, 
                          unless such power is solely the result of being 
                          an officer of such company.
                              ``(ii) Family client.--The term `family 
                          client' means:
                                      ``(I) Any family member.
                                      ``(II) Any key employee.
                                      ``(III) Any charitable foundation, 
                                  charitable organization, charitable 
                                  trust, or other non-profit organization 
                                  established or controlled, directly or 
                                  indirectly, by persons one or more of 
                                  whom is a family client.
                                      ``(IV) Any trust or estate funded 
                                  exclusively by one or more family 
                                  members or established primarily for 
                                  the benefit of one or more family 
                                  clients.
                                      ``(V) Any limited liability 
                                  company, partnership, corporation, or 
                                  other entity, if--
                                              ``(aa) such entity is 
                                          majority-owned or controlled, 
                                          directly or indirectly, by, or 
                                          operated primarily for the 
                                          benefit of, one or more family 
                                          clients;
                                              ``(bb) the family office is 
                                          giving investment advice to 
                                          such entity; and
                                              ``(cc) persons who are not 
                                          otherwise defined as a family 
                                          client do not own interests in 
                                          such entity.
                                      ``(VI) Any former family member.
                                      ``(VII) Any former key employee, 
                                  if, upon the termination of such 
                                  individual's employment by the family 
                                  office or family client, the former key 
                                  employee shall not receive investment 
                                  advice from the family office or the 
                                  family client (or invest additional 
                                  assets with a family office-advised 
                                  trust, charitable foundation, or 
                                  entity), other than with respect to 
                                  assets advised, directly or indirectly, 
                                  by the family office or family client 
                                  immediately prior to the termination of 
                                  such individual's employment, except 
                                  that a former key employee shall be 
                                  permitted to receive investment advice 
                                  from the family office with respect to 
                                  additional investments that the former 
                                  key employee was contractually 
                                  obligated to make, and that relate to a 
                                  family office advised investment 
                                  existing, in each case, prior to the 
                                  time the person became a former key 
                                  employee. For purposes of this 
                                  subclause, the term `family office' 
                                  shall include any entity described 
                                  under subclause (V).
                              ``(iii) Family member.--
                                      ``(I) In general.--The term `family 
                                  member' means:
                                              ``(aa) Any natural person 
                                          whose economic activities 
                                          created or substantially 
                                          contributed to the family's 
                                          wealth, and such person's 
                                          spouse.
                                              ``(bb) The siblings, 
                                          parents, grandparents of a 
                                          person described in item (aa).
                                              ``(cc) The spouse of a 
                                          person described in item (bb).
                                              ``(dd) The siblings of a 
                                          person described in item (bb) 
                                          or (cc).
                                              ``(ee) The spouse of a 
                                          person described in item (dd).
                                              ``(ff) The lineal 
                                          descendant of a person 
                                          described in item (bb), (cc), 
                                          (dd), or (ee).
                                              ``(gg) The spouse of a 
                                          person described in item (ff).
                                      ``(II) Construction.--For purposes 
                                  of this clause--
                                              ``(aa) the term `lineal 
                                          descendant' includes natural 
                                          children, adopted children, and 
                                          stepchildren;
                                              ``(bb) the term `spouse' 
                                          includes spousal equivalents; 
                                          and
                                              ``(cc) the terms 
                                          `siblings', `parents', and 
                                          `grandparents' include step-
                                          siblings, step-parents, and 
                                          step-grandparents, 
                                          respectively.
                              ``(iv) Former family member.--The term 
                          `former family member' means a spouse or a 
                          descendant who was a family member but is no 
                          longer a family member due to a divorce or 
                          other similar event.
                              ``(v) Key employee.--The term `key 
                          employee' means any natural person (and such 
                          person's spouse or lineal descendant) who is an 
                          executive officer, director, trustee, general 
                          partner, or person serving in a similar 
                          capacity, of the family office or any employee 
                          of the family office (other than an employee 
                          performing solely clerical, secretarial, or 
                          administrative functions) who, in connection 
                          with his or her regular functions or duties, 
                          participates in the investment activities of 
                          the family office. For purposes of this 
                          subclause, the term `family office' shall 
                          include any entity described under clause 
                          (ii)(V).
                              ``(vi) Spousal equivalent.--The term 
                          `spousal equivalent' means a cohabitant 
                          occupying a relationship generally equivalent 
                          to that of a spouse.
                      ``(D) Involuntary events.--If--
                              ``(i) a person that is not a family client 
                          becomes a client of the family office as a 
                          result of the death of a family member or key 
                          employee or other involuntary transfer from a 
                          family member or key employee, or
                              ``(ii) a person ceases to be a family 
                          client,
                  that person shall be deemed to be a family client until 
                  the end of the 1-year period beginning on the date that 
                  it is both legally and practically feasible for the 
                  family office to transfer the affected assets to such 
                  person, but in no event earlier than 1 year from the 
                  date that it becomes legally feasible to transfer the 
                  affected assets unless it becomes practically feasible 
                  to affect such a transfer sooner.''.
target: Amends the Investment Advisers Act of 1940 to define "family office" (exempt from coverage by the Act) as a company (including any director, partner, trustee, or employee of such company, when acting in their respective capacities as such) that has no clients other than family clients and is owned, controlled, or operated primarily for the benefit of family clients and does not hold itself out to the public as an investment adviser.
feat_title: To amend the Investment Advisers Act of 1940 to add a definition of family office.