[Federal Register Volume 86, Number 39 (Tuesday, March 2, 2021)]
[Notices]
[Pages 12253-12254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04215]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Advisers Act Release No. 5690/803-00247]


Lewis Family Advisors, LLC

February 24, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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

Applicant:  Lewis Family Advisors, LLC (the ``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:  The 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.''

Filing Dates:  The application was filed on June 4, 2018, and amended 
on August 30, 2019, and December 8, 2020.

Hearing or Notification of Hearing:  An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by emailing the Commission's 
Secretary at [email protected] and serving the Applicant with a 
copy of the request by email. Hearing requests should be received by 
the Commission by 5:30 p.m. on March 22, 2021, and should be 
accompanied by proof of service on the Applicant, in the form of an 
affidavit or, for lawyers, a certificate of service. Pursuant to Rule 
0-5 under the Advisers Act, hearing requests should state the nature of 
the writer's interest, any facts bearing upon the desirability of a 
hearing on the matter, the reason for the request, and the issues 
contested. Persons may request notification of a hearing by emailing 
the Commission's Secretary at [email protected].

ADDRESSES: The Commission: [email protected]. Applicant: Lewis 
Family Advisors, LLC, c/o Clare F. Black, Esq., at 
[email protected].

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at 
(202) 551-6811 or Kaitlin C. Bottock, Branch Chief, at (202) 551-6825 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's website either at http://www.sec.gov/rules/iareleases.shtml or by calling (202) 551-8090.

Applicant's Representations

    1. The Applicant is a Nevada Family Trust Company and a multi-
generational single-family office that provides or intends to provide 
services to the family and descendants of Ralph M. Lewis. The Applicant 
is wholly-owned by Family Clients and is exclusively controlled 
(directly and indirectly) by one or more Family Members and/or Family 
Entities in compliance with Rule 202(a)(11)(G)-1 (the ``Family Office 
Rule''). For purposes of the application, the term ``Lewis Family'' 
means the lineal descendants of Ralph M. Lewis, their spouses or 
spousal equivalents, and all other persons and entities that qualify as 
``Family Clients'' as defined in paragraph (d)(4) of the Family Office 
Rule. Unless otherwise indicated, capitalized terms herein have the 
same meaning as defined in the Family Office Rule.
    2. The Applicant provides both advisory and non-advisory services 
(collectively, ``Services'') to members of the Lewis Family. 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. The Applicant represents that: (i) Each of the persons served by 
the Applicant is a Family Client (i.e., the Applicant has no investment 
advisory clients other than Family Clients as required by paragraph 
(b)(1) of the Family Office Rule); (ii) the Applicant is owned and 
controlled in a manner that complies in all respects with paragraph 
(b)(2) of the Family Office Rule; and (iii) the 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, the Applicant represents that Family Members account for 
approximately 99% of the natural persons to whom the Applicant provides 
Advisory Services.
    4. In addition to the Family Clients, the Applicant desires to 
provide Services (including Advisory Services) to a niece (``Niece'') 
of Ralph M. Lewis (the ``Additional Family Client''). The Additional 
Family Client does not have an ownership interest in the Applicant. The 
Applicant represents that the assets beneficially owned by Family 
Members and/or Family Entities (excluding the Additional Family Client) 
would make up at least 100% of the assets for which the Applicant 
provides Advisory Services.
    5. The Applicant represents that the Niece has been supported by 
Family Members and has been considered and treated as a close family 
member of the Lewis Family for purposes of intrafamilial affection for 
many years and has attended various family events. The Applicant 
maintains that including the Additional Family Client in the ``family'' 
would be consistent with the existing familial relationship among the 
family members.

[[Page 12254]]

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 part of a regular business, issues or 
promulgates analyses or reports concerning securities. . . .''
    2. The 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 is currently eligible but would no longer qualify if the 
Applicant provides Services to the Additional Family Clients. Absent 
the requested relief, once the Applicant provides Services to the 
Additional Family Client and can no longer rely on the Family Office 
Rule, the Applicant would be required to register as an investment 
adviser in the State of Nevada and would be subject to regulation in 
the State of Nevada, notwithstanding that (i) the Applicant does not 
hold itself out to the public as an investment adviser and does not 
market non-public offerings to persons or entities that are not Family 
Clients, (ii) the Applicant is wholly owned and controlled by members 
of the Lewis Family, in accordance with paragraph (b)(2) of the Family 
Office Rule, and (iii) the Applicant is a ``family office'' for the 
Lewis Family and will not offer its Services to anyone other than 
Family Clients and the Additional Family Client.
    3. The Applicant submits that its proposed 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, the 
Applicant notes that if the Common Ancestor chosen were one branch 
higher in the familial tree, the Niece would be a Family Member. The 
Applicant states that in requesting the order, the Applicant 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 Additional Family Client does not fall within the 
definition of Family Member, the Applicant represents that the 
Additional Family Client has been treated as a close family member of 
the Lewis Family for many years. Additionally, the Applicant represents 
that if the Additional Family Client's assets were managed by the 
Applicant, the assets owned by the Additional Family Client would 
represent less than half of one percent (.5%) of the Applicant's assets 
under management.
    4. The Applicant also submits that there is no public interest in 
requiring the Applicant to be registered under the Advisers Act. The 
Applicant states that the office is a private organization that was 
formed to be the family trust company for the Lewis Family, and that 
the Applicant does not have any public clients. The Applicant maintains 
that the office's Advisory Services are exclusively tailored to the 
needs of the Lewis Family and the Additional Family Client. The 
Applicant argues that the provision of Advisory Services to the 
Additional Family Client 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. The 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 issues would be 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.
    6. The Applicant maintains that, based on its unusual 
circumstances--desiring to provide Services to one Additional Family 
Client who has been considered and treated as a family member and whose 
status as a client of the office would not change the nature of the 
office's operations to that of a commercial advisory business--an 
exemptive order is appropriate based on the Applicant's specific facts 
and circumstances.
    7. For the foregoing reasons, the Applicant requests an order 
declaring it to be a person not within the intent of Section 202(a)(11) 
of the Advisers Act. The Applicant submits that the order is necessary 
and appropriate, in the public interest, consistent with the protection 
of investors, and consistent with the 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 generally will 
be deemed to be, and be treated as if she 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 Applicant will at all times be wholly-owned by Family 
Clients and exclusively controlled (directly or indirectly) by one or 
more Family Members 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 99% of the assets for which the 
Applicant provides Advisory Services.
    4. The 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.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-04215 Filed 3-1-21; 8:45 am]
BILLING CODE 8011-01-P