
[Federal Register Volume 79, Number 129 (Monday, July 7, 2014)]
[Notices]
[Pages 38339-38341]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15796]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IA-3867/803-00212]


Duncan Family Office; Notice of Application

July 1, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an exemptive order under section 
202(a)(11)(H) of the Investment Advisers Act of 1940 (``Advisers 
Act'').

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    Applicant: Duncan Family Office (``Applicant'').
    Relevant Advisers Act Sections: Exemption requested under section 
202(a)(11)(H) of the Advisers Act from section 202(a)(11) of the 
Advisers Act.
    Summary of Application: Applicant requests that the Commission 
issue an order declaring it to be a person not within the intent of 
section 202(a)(11) of the Advisers Act, which defines the term 
``investment adviser.''

DATES: Filing Dates: The application was filed on March 27, 2012, and 
amended on March 4, 2014, and April 22, 2014.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving Applicant with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on July 28, 2014 and should be accompanied by proof of 
service on Applicant, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons may request notification of a hearing by writing to 
the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street 
NE., Washington, DC 20549. Applicant, Duncan Family Office, c/o Martin 
E. Lybecker, Perkins Coie LLP, Suite 600, 700 Thirteenth Street NW., 
Washington, DC 20005.

FOR FURTHER INFORMATION CONTACT: Vanessa M. Meeks, Senior Counsel, at 
(202) 551-6806 or Melissa R. Harke, Branch Chief, at (202) 551-6722 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 100 F Street NE., Washington, DC 20549-
0102 (telephone (202) 551-5850).

Applicant's Representations

    1. Applicant is a multi-generational single-family office that 
provides services to the family and descendants of Dan L. Duncan. 
Applicant is a division of Enterprise Products Company, an energy 
company located in Houston, Texas (``Company''), and the Company is 
wholly-owned by Family Clients and is exclusively controlled (directly 
or indirectly) by one or more Family Members and/or Family Entities in 
compliance with rule 202(a)(11)(G)-1 (``Family Office Rule''). For 
purposes of the application, the term ``Duncan Family'' means the 
lineal

[[Page 38340]]

descendants of Dan L. Duncan, their spouses, and all of the persons and 
entities that qualify as Family Clients as defined in paragraph (d)(4) 
of the Family Office Rule. Capitalized terms have the same meaning as 
defined in the Family Office Rule.
    2. Applicant provides both advisory and non-advisory services 
(collectively, the ``Services''). Any Service provided by the Applicant 
that relates to investment advice about securities or may otherwise be 
construed as advisory in nature is considered an ``Advisory Service.''
    3. Applicant represents that: (i) Other than the exception 
discussed in representation 4 below, each of the persons served by the 
Applicant is a Family Client, i.e., Applicant has no clients other than 
Family Clients as required by paragraph (b)(1) of the Family Office 
Rule, (ii) Applicant is a division of the Company, which is owned and 
controlled in a manner that complies in all respects with paragraph 
(b)(2) of the Family Office Rule, and (iii) Applicant does not hold 
itself out to the public as an investment adviser as required by 
paragraph (b)(3) of the Family Office Rule. At the time of the 
application, Applicant represents that Family Members account for 
approximately 75 percent of the natural persons to whom the Applicant 
provides Advisory Services.
    4. Applicant provides Services to the mother of a spouse of a 
lineal descendant of Dan L. Duncan (``Mother-in-Law''), as well as 
certain related foundations (collectively, the ``Additional Family 
Client''). Applicant represents that if the Mother-in-Law were a Family 
Client, the related foundations would meet the requirements of 
(d)(4)(v) of the Family Office Rule.
    5. The Additional Family Client does not have an ownership interest 
in the Company. Applicant represents that the assets beneficially owned 
by Family Members and/or Family Entities (excluding the Additional 
Family Client's Family Entities) make up at least 75 percent of the 
total assets for which the Applicant provides Advisory Services.
    6. Applicant represents that the Additional Family Client has 
important familial ties to and is an integral part of the Duncan 
Family. Applicant maintains that including the Additional Family Client 
in the ``family'' simply recognizes and memorializes the familial ties 
and intra-familial relationships that already exist, and have existed 
for at least 16 years while the assets of the Additional Family Client 
were managed by the Duncan Family.

Applicant's Legal Analysis

    1. Section 202(a)(11) of the Advisers Act defines the term 
``investment adviser'' to mean ``any person who, for compensation, 
engages in the business of advising others, either directly or through 
publications or writings, as to the value of securities or as to the 
advisability of investing in, purchasing, or selling securities, or 
who, for compensation and as a part of a regular business, issues or 
promulgates analyses or reports concerning securities . . . . ''
    2. Applicant falls within the definition of an investment adviser 
under section 202(a)(11). The Family Office Rule provides an exclusion 
from the definition of investment adviser for which the Applicant would 
be eligible but for the provision of Services to the Additional Family 
Client. Section 203(a) of the Advisers Act requires investment advisers 
to register with the Commission. Because the Applicant has regulatory 
assets under management of more than $100 million, it is not prohibited 
from registering with the Commission under section 203A(a) of the 
Advisers Act. Therefore, absent relief, Applicant would be required to 
register under section 203(a) of the Advisers Act.
    3. Applicant submits that its relationship with the Additional 
Family Client does not change the nature of the office into that of a 
commercial advisory firm. In support of this argument, Applicant notes 
that if the Mother-in-Law were the mother of a lineal descendent of Dan 
L. Duncan, rather than the mother of a spouse of a lineal descendent, 
there would be no question that each of the persons presently being 
served by the office would be a Family Member, and that the related 
foundations would meet the requirements of paragraph (d)(4)(v) of the 
Family Office Rule pertaining to charitable foundations. Applicant 
states that in requesting the order, the office is not attempting to 
expand its operations or engage in any level of commercial activity to 
which the Advisers Act is designed to apply. Indeed, although the 
Mother-in-Law does not fall within the definition of Family Member, she 
is considered to be, and is treated as, a member of the Duncan Family, 
and the number of natural persons who are not Family Members as a 
percentage of the total natural persons to whom the office would 
provide Advisory Services if relief were granted would be only 
approximately 25 percent. Applicant maintains that, from the 
perspective of the Duncan Family, Applicant seeks to continue providing 
Advisory Services exclusively to members of a single family.
    4. Applicant also submits that there is no public interest in 
requiring the Applicant to be registered under the Advisers Act. 
Applicant states that the office is a private organization that was 
formed to be the ``family office'' for the Duncan Family, and that the 
office does not have any public clients. Applicant maintains that the 
office's Advisory Services are tailored exclusively to the needs of the 
Duncan Family and the Additional Family Client. Applicant argues that 
the presence of the Additional Family Client, who has been receiving 
Advisory Services from the office for 16 years, does not create any 
public interest that would require the office to be registered under 
the Advisers Act that is different in any manner than the 
considerations that apply to a ``family office'' that complies in all 
respects with the Family Office Rule.
    5. Applicant argues that, although the Family Office Rule largely 
codified the exemptive orders that the Commission had previously issued 
before the enactment of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, the Commission recognized in proposing the rule that 
the exact representations, conditions, or terms contained in every 
exemptive order could not be captured in a rule of general 
applicability. The Commission noted that family offices would remain 
free to seek a Commission exemptive order to advise an individual or 
entity that did not meet the proposed family client definition, and 
that certain situations may raise unique conflicts and issues that are 
more appropriately addressed through an exemptive order process where 
the Commission can consider the specific facts and circumstances, than 
through a rule of general applicability. Applicant maintains that its 
unusual circumstances--providing Services to Family Clients and to an 
Additional Family Client for the past 16 years--have not changed the 
nature of the office's operations into that of a commercial advisory 
business, and that an exemptive order is appropriate based on the 
Applicant's specific facts and circumstances.
    6. For the foregoing reasons, Applicant requests an order declaring 
it to be a person not within the intent of section 202(a)(11) of the 
Advisers Act. Applicant submits that the order is necessary and 
appropriate, in the public interest, consistent with the protection of 
investors, and consistent with the

[[Page 38341]]

purposes fairly intended by the policy and provisions of the Advisers 
Act.

Applicant's Conditions

    1. The Applicant will offer and provide Advisory Services only to 
Family Clients and to the Additional Family Client, who will generally 
be deemed to be, and treated as if she and certain related foundations 
were, a Family Client; provided, however, that the Additional Family 
Client will be deemed to be, and treated as if she were, a Family 
Member for purposes of paragraph (b)(1) and for purposes of paragraph 
(d)(4)(vi) of the Family Office Rule.
    2. The Company will at all times be wholly-owned by Family Clients 
and exclusively controlled (directly or indirectly) by one or more 
Family Members and/or Family Entities (excluding the Additional Family 
Client's Family Entities) as defined in paragraph (d)(5) of the Family 
Office Rule.
    3. At all times the assets beneficially owned by Family Members 
and/or Family Entities (excluding the Additional Family Client's Family 
Entities) will account for at least 75 percent of the assets for which 
Applicant provides Advisory Services.
    4. Applicant will comply with all the terms for exclusion from the 
definition of investment adviser under the Advisers Act set forth in 
the Family Office Rule except for the limited exception requested by 
this application.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-15796 Filed 7-3-14; 8:45 am]
BILLING CODE 8011-01-P


