A number of investment houses transformed into family offices in recent years to escape regulatory controls. Maybe a few more will shift, or perhaps some might go back to their older models. Here is a summary of the converts.
Family offices are created for a variety of reasons. The rise of US regulations controlling wealth managers after the global financial tsunami prompted some US hedge funds and other investment bosses to reinvent themselves as family offices. George Soros' conversion is probably the most well known.
Whether they stay as family offices, or convert back again, will partly depend on specific circumstances. It may be that this trend, triggered in the immediate aftermath of the Dodd-Frank legislation, has run its course. But some firms will continue to make the shift to family office status if it simplifies their regulatory lives.
Under the rules, organizations managing outsiders’ money had to register with the SEC (by March 2012) for the first time, with all the reporting and associated burdens that involves. (See an article about the challenges here.)
Here is a list of organizations that have converted to family offices. This list is not exhaustive so if readers have examples they want to add, please email the editor at email@example.com
Soros Fund Management, headed by hedge fund star George Soros, stopped managing funds for outside investors and become a family office. (July 2011)
Randall Yuen, founder of Jafra Capital Management, told investors that the firm was shutting hedge funds at the end of September 2018. The business was set up only about two years previously.
Henry Swieca, a co-founder of Highbridge Capital Management, returned money to outside investors in his hedge fund, Talpion Fund Management. (2011)
A New York-based multi-strategy hedge fund firm, Brencourt Advisors, returned outside capital to investors and re-invented itself as a family office. (October 2012)
Weintraub Capital Management, a $1 billion San Francisco-based long-short equity hedge fund, handed back money to investors and became a family office overseeing the wealth of founder Jerry Weintraub. (November 2012)
Embattled hedge fund manager Steven A Cohen changed the name of his US-based SAC Capital Advisors to a family office structure called Point72 Asset Management. (March 2014)
Kamunting Street Capital returned capital of non-family members to investors and converted to a family office. That business is also known as K-Street.
Other conversions included TigerShark management and Loeb King Management.