80 FR 23064 - D-W Investments LLC; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 79 (April 24, 2015)

The Applicant requests that the Commission issue an order declaring the Applicant to be a person not within the intent of section 202(a)(11), which defines the term ``investment adviser.''

[Federal Register Volume 80, Number 79 (Friday, April 24, 2015)]
[Notices]
[Pages 23064-23065]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-09556]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IA-4066; File No. 803-00226]


D-W Investments LLC; Notice of Application

April 20, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of Application for Exemption under the Investment 
Advisers Act of 1940 (``Advisers Act'').

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    Applicant: D-W Investments 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: The Applicant requests that the Commission issue an order 
declaring the Applicant to be a person not within the intent of section 
202(a)(11), which defines the term ``investment adviser.''

DATES: Filing Dates: The application was filed on August 7, 2014, 
amended on January 26, 2015, and further amended on March 30, 2015.
    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 the 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 May 18, 2015 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 writing to the Commission's 
Secretary.

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

FOR FURTHER INFORMATION CONTACT: Rachel Loko, Senior Counsel, at (202) 
551-6883, or Holly L. Hunter-Ceci, 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 Web site either at http://www.sec.gov/rules/iareleases.shtml or by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicant's Representations

    1. The Applicant is a multi-generational single-family office that 
provides services to the family and descendants of Myron A.Wick, Jr. 
The Applicant is a Delaware limited liability company that is wholly-
owned, other than the exception discussed in representation 5 below, 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 ``Wick Family'' means the lineal descendants of 
Myron A. Wick, Jr., 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. The 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. The Applicant represents that, other than the exceptions 
discussed in representations 4 and 5 below, (i) each of the persons 
served by the Applicant is a Family Client, i.e., the Applicant has no 
clients other than Family Clients as required by paragraph (b)(1) of 
the Family Office Rule, (ii) the Applicant is a Delaware limited 
liability company 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 more than 95% of the natural persons to whom the 
Applicant provides Advisory Services.
    4. The Applicant provides Services to the sister of the spouse of a 
lineal descendant of Myron A. Wick, Jr. (``Sister-in-Law''), as well as 
an irrevocable trust (``Trust'') of which she is a beneficiary (the 
Sister-in-Law and the Trust, collectively, the ``Additional Family 
Client'' and, together with the Wick Family, the ``Extended Wick 
Family''). The Applicant represents that if the Sister-in-Law were a 
Family Client, the Trust would meet the requirements of (d)(4)(vii) of 
the Family Office Rule.
    5. The Sister-in-Law has less than a 3% limited liability company 
membership interest in the Applicant, and the Trust has less than a 2% 
limited liability company membership interest in the Applicant. Neither 
the Sister-in-Law nor the Trust has a management role or exercises 
control over the Applicant. The Applicant represents that the assets 
owned beneficially by Family Members and/or Family Entities (excluding 
the Additional Family Client) make up at least 75% of the total assets 
for which the Applicant provides Advisory Services.
    6. The Applicant represents that the Additional Family Client has 
important familial ties to and is an integral part of the Wick Family. 
The 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 9 years while the assets of the Additional Family Client were 
managed by the Wick 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. The Applicant falls within the definition of an investment 
adviser under section 202(a)(11). The Family Office 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

[[Page 23065]]

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, the Applicant would be required to 
register under Section 203(a) of the Advisers Act.
    3. The Applicant submits that its relationship with the Additional 
Family Client does not change the nature of the Applicant into that of 
a commercial advisory firm. In support of this argument, the Applicant 
notes that if the Sister-in-Law were the sister of a lineal descendant 
of Myron A. Wick Jr., rather than the sister of a spouse of a lineal 
descendant, there would be no question that each of the persons 
presently being served by the Applicant would be a Family Member, and 
that the related trust would meet the requirements of paragraph 
(d)(4)(vii) of the Family Office Rule pertaining to any irrevocable 
trust in which one or more other Family Clients are the only current 
beneficiaries. 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 Sister-in-Law does not fall within the 
definition of Family Member, she is considered to be, and is treated 
as, a member of the Wick Family, and the number of natural persons who 
are not Family Members as a percentage of the total natural persons to 
whom the Applicant would provide Advisory Services if relief were 
granted would be less than 5%. The Applicant maintains that, from the 
perspective of the Wick Family, the Applicant seeks to continue 
providing Advisory Services exclusively to members of a single family.
    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 Applicant is a private organization that was 
formed to be the ``family office'' for the Wick Family, and that the 
Applicant does not have any public clients. The Applicant maintains 
that its Advisory Services are tailored exclusively to the needs of the 
Wick Family and the Additional Family Client. The Applicant argues that 
the presence of the Additional Family Client, who has been receiving 
Advisory Services from the Applicant for 9 years, does not create any 
public interest that would require the Applicant to be registered under 
the Advisers Act that is different in any manner from 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 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. The 
Applicant maintains that its unusual circumstances--providing Services 
to Family Clients and to an Additional Family Client for the past 9 
years--have not changed the nature of the Applicant'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, 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 will generally 
be deemed to be, and treated as if the Sister-in-Law and the Trust each 
were, a Family Client; provided, however, that the Additional Family 
Client will be deemed to be, and treated as if it were, a Family Member 
for purposes of paragraph (b)(1) and for purposes of paragraph 
(d)(4)(vii) of the Family Office Rule.
    2. The Applicant will at all times be wholly owned by the Extended 
Wick Family and exclusively controlled (directly or indirectly) by one 
or more Family Members and/or Family Entities (excluding the Additional 
Family Client and 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 and the 
Additional Family Client's Family Entities) will account for at least 
75% 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 
the application.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-09556 Filed 4-23-15; 8:45 am]
 BILLING CODE 8011-01-P