Since the Archegos Scandal rocked the Family Office community in the first quarter of 2021, Family Offices have been preparing themselves for a string of new regulations and it suddenly feels as though they might just happen.

According to our 2022 survey, 54% of Family Offices think more regulation will be in place by the end of the year and if this week’s announcement from the Commodity Future Trading Commission is anything to go by, the majority of Family Offices could be right.

Chairman Rostin Behnam said it would not surprise him if there were more Bill Hwang’s out there and a bid to catch them said the top US derivatives regulator is ratcheting up scrutiny of Family Offices.

Behnam said: “Clearly there was a failure across many desks and I think there is a role for regulators to play in terms of the data that we collect, reporting that is required and again, a more macro review of stability and resiliency issues.”

This comes some months on from a Democrat-approved bill that requires Family Offices with more than $750M in AUM to register with the Securities and Exchange Commission (SEC) which under current law, they are exempt.

The new bill unpicked much of the Dodd-Frank Act passed some 10 years ago by also ending the exemption of SEC registration for Family Offices with non-family member investors. The bill had been designed to give the SEC more information about the size, portfolios and leverage taken on by Family Offices and was the first legislative response to the Archegos scandal.

What will come next?

While more regulation or at least more attempts at imposing regulation are on their way, it will be hard to embed and not to mention unfair to tarnish an entire community with the brush of one. Archegos does not represent an inherent Family Office problem and while there may be many more Hwang’s out there, there are also 7,000 Single Family Office entities which are genuine investment vehicles and who operate within the rules.

As Behnam said: “this isn’t the traditional Family Office that we are accustomed to.”

Do you sit with the 54% of Family Offices who fear further regulation?