83 FR 19853 - 1112 Partners, LLC

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 87 (May 4, 2018)

Page Range		19853-19854
FR Document		2018-09559

Federal Register, Volume 83 Issue 87 (Friday, May 4, 2018)

[Federal Register Volume 83, Number 87 (Friday, May 4, 2018)]
[Notices]
[Pages 19853-19854]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-09559]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Advisers Act Release No. 4902/803-00239]

1112 Partners, LLC

May 1, 2018.
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: 1112 Partners, 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 January 17, 2017, and
amended on May 8, 2017; September 15, 2017; and March 9, 2018.
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 25, 2018, 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, 1112 Partners, LLC, c/o Ingrid R.
Welch, Esq., Cozen O'Connor, One Liberty Place, 1650 Market Street,
Suite 2800, Philadelphia, PA 19103.

FOR FURTHER INFORMATION CONTACT: James D. McGinnis, Senior Counsel, at
(202) 551-3025 or Holly L. Hunter-Ceci, Assistant Chief Counsel, 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 recently-formed, multi-generational single-
family office that provides or intends to provide services to the
family and descendants of William Render Ford. 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 ``Ford Family'' means the lineal
descendants of William Render Ford, 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 Ford 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. Prior to forming the Applicant, David B. Ford, Jr. was
associated with a third-party registered investment adviser (``RIA'')
that for approximately eleven (11) years managed substantially all of
the advisory accounts of the Ford Family managed or intended to be
managed by the Applicant, and among these accounts were accounts of the
Additional Family Clients (as defined below). Effective as of October
1, 2016, David B. Ford, Jr.'s association with RIA was terminated.
Commencing October 1, 2016, the advisory accounts of the Family Clients
managed by RIA were transition to the Applicant.
4. 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 100% of the natural persons to whom the Applicant
provides Advisory Services.
5. In addition to the Family Clients, the Applicant desires to
provide Services (including Advisory Services) to the parents of a
spouse of a lineal descendant of William Render Ford (``Parents-in-
Law''), the brother of a spouse of a lineal descendant of William
Render Ford and his spouse and children (``Brother-in-Law'') and
retirement plan accounts of the Parents-in-Law or Brother-in-Law
(collectively, the ``Additional Family Clients'').
6. The Additional Family Clients do 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 Clients) would make up at least 90% of the total
assets for which the Applicant provides Advisory Services.
7. The Applicant represents that the Parents-in-Law and Brother-in-
Law have important familial ties to and are an integral part of the
Ford Family. The Applicant maintains that including the Additional
Family Clients in the ``family'' simply recognizes and memorializes the
familial ties and intra-familial relationships that already exist, and
have existed for fifteen (15) years and that the inclusion of the
Additional Family Clients as members of the Ford Family for which the
Applicant may provide Services would be consistent with the existing
familial relationship among the family members.

The 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

[[Page 19854]]

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
Clients. Section 203(a) of the Advisers Act requires investment
advisers to register with the SEC. Because the Applicant has regulatory
assets under management of more than $100 million, it is not prohibited
from registering with 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 proposed relationship with the
Additional Family Clients 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 Parents-in-Law and Brother-in-Law were the
parents and sibling, respectively of a lineal descendant, rather than
the parents and sibling, respectively, of a spouse of a lineal
descendant, there would be no question that each of them would be a
Family Member, and their retirement assets would similarly fall within
the definition of Family Client. The 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. Although the Additional Family
Clients do not fall within the definition of Family Member, the
Applicant represents that the Additional Family Clients for the last
fifteen (15) years and to this day were and continue to be considered
and treated as members of the Ford Family, and that prior to forming
the Applicant, the RIA had for some time provided services to the
Additional Family Clients. Additionally, the Applicant represents that
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 less than 9%.
From the perspective of the Ford Family, allowing the Applicant to
provide Services to the Additional Family Clients is consistent with
the family's previous experience with investment management services
provided by the RIA and the existing family relationship among family
members.
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 office'' for the Ford Family, and that the
office does not have any public clients. The Applicant maintains that
the office's Advisory Services are exclusively tailored to the needs of
the Ford Family and the Additional Family Clients. The Applicant argues
that the provision of Advisory Services to the Additional Family
Clients, who have been receiving Advisory Services from the RIA in the
same manner as other family members for eleven (11) 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. 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.
6. The Applicant maintains that, based on its unusual
circumstances--desiring to provide Services to certain Additional
Family Clients who are relatives that have been considered and treated
as family members for fifteen (15) years and whose status as clients 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.

The Applicant's Conditions

1. The Applicant will offer and provide Advisory Services only to
Family Clients and to the Additional Family Clients, who generally will
be deemed to be, and be treated as if they were, Family Clients;
provided, however, that the Additional Family Clients will be deemed to
be, and treated as if they were, Family Members 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 and/or Family Entities (excluding the Additional
Family Clients' 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 Clients' Family
Entities) will account for at least 90% 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.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-09559 Filed 5-3-18; 8:45 am]
BILLING CODE 8011-01-P

Federal Register / Vol. 83, No. 87 / Friday, May 4, 2018 / Notices 19853

For the Commission, by the Division of Cozen O’Connor, One Liberty Place, Applicant has no investment advisory
Trading and Markets, pursuant to delegated 1650 Market Street, Suite 2800, clients other than Family Clients as
authority.18 Philadelphia, PA 19103. required by paragraph (b)(1) of the
Eduardo A. Aleman, FOR FURTHER INFORMATION CONTACT: Family Office Rule); (ii) the Applicant is
Assistant Secretary. James D. McGinnis, Senior Counsel, at owned and controlled in a manner that
[FR Doc. 2018–09441 Filed 5–3–18; 8:45 am] (202) 551–3025 or Holly L. Hunter-Ceci, complies in all respects with paragraph
BILLING CODE 8011–01–P Assistant Chief Counsel, at (202) 551– (b)(2) of the Family Office Rule; and (iii)
6825 (Division of Investment the Applicant does not hold itself out to
Management, Chief Counsel’s Office). the public as an investment adviser as
SECURITIES AND EXCHANGE required by paragraph (b)(3) of the
SUPPLEMENTARY INFORMATION: The
COMMISSION Family Office Rule. At the time of the
following is a summary of the
application, the Applicant represents
[Investment Advisers Act Release No. 4902/ application. The complete application
that Family Members account for
803–00239] may be obtained via the Commission’s
approximately 100% of the natural
website either at http://www.sec.gov/
1112 Partners, LLC persons to whom the Applicant
rules/iareleases.shtml or by calling (202)
provides Advisory Services.
May 1, 2018. 551–8090. 5. In addition to the Family Clients,
AGENCY: Securities and Exchange Applicant’s Representations: the Applicant desires to provide
Commission (‘‘Commission’’). Services (including Advisory Services)
1. The Applicant is a recently-formed,
ACTION: Notice. to the parents of a spouse of a lineal
multi-generational single-family office
descendant of William Render Ford
Notice of application for an exemptive that provides or intends to provide (‘‘Parents-in-Law’’), the brother of a
order under section 202(a)(11)(H) of the services to the family and descendants spouse of a lineal descendant of William
Investment Advisers Act of 1940 of William Render Ford. The Applicant
Render Ford and his spouse and
(‘‘Advisers Act’’). is wholly-owned by Family Clients and children (‘‘Brother-in-Law’’) and
Applicant: 1112 Partners, LLC (the is exclusively controlled (directly and retirement plan accounts of the Parents-
‘‘Applicant’’). indirectly) by one or more Family in-Law or Brother-in-Law (collectively,
Relevant Advisers Act Sections: Members and/or Family Entities in the ‘‘Additional Family Clients’’).
Exemption requested under section compliance with Rule 202(a)(11)(G)–1 6. The Additional Family Clients do
202(a)(11)(H) of the Advisers Act from (the ‘‘Family Office Rule’’). For not have an ownership interest in the
section 202(a)(11) of the Advisers Act. purposes of the application, the term Applicant. The Applicant represents
Summary of Application: The ‘‘Ford Family’’ means the lineal that the assets beneficially owned by
Applicant requests that the Commission descendants of William Render Ford, Family Members and/or Family Entities
issue an order declaring it to be a person their spouses or spousal equivalents, (excluding the Additional Family
not within the intent of Section and all other persons and entities that Clients) would make up at least 90% of
202(a)(11) of the Advisers Act, which qualify as ‘‘Family Clients’’ as defined the total assets for which the Applicant
defines the term ‘‘investment adviser.’’ in paragraph (d)(4) of the Family Office provides Advisory Services.
Filing Dates: The application was Rule. Unless otherwise indicated, 7. The Applicant represents that the
filed on January 17, 2017, and amended capitalized terms herein have the same Parents-in-Law and Brother-in-Law have
on May 8, 2017; September 15, 2017; meaning as defined in the Family Office important familial ties to and are an
and March 9, 2018. Rule. integral part of the Ford Family. The
Hearing or Notification of Hearing: An 2. The Applicant provides both Applicant maintains that including the
order granting the application will be advisory and non-advisory services Additional Family Clients in the
issued unless the Commission orders a (collectively, ‘‘Services’’) to members of ‘‘family’’ simply recognizes and
hearing. Interested persons may request the Ford Family. Any Service provided memorializes the familial ties and intra-
a hearing by writing to the by the Applicant that relates to familial relationships that already exist,
Commission’s Secretary and serving the investment advice about securities or and have existed for fifteen (15) years
Applicant with a copy of the request, may otherwise be construed as advisory and that the inclusion of the Additional
personally or by mail. Hearing requests in nature is considered an ‘‘Advisory Family Clients as members of the Ford
should be received by the Commission Service.’’ Family for which the Applicant may
by 5:30 p.m. on May 25, 2018, and 3. Prior to forming the Applicant, provide Services would be consistent
should be accompanied by proof of David B. Ford, Jr. was associated with with the existing familial relationship
service on the Applicant, in the form of a third-party registered investment among the family members.
an affidavit or, for lawyers, a certificate adviser (‘‘RIA’’) that for approximately
of service. Pursuant to Rule 0–5 under eleven (11) years managed substantially The Applicant’s Legal Analysis
the Advisers Act, hearing requests all of the advisory accounts of the Ford 1. Section 202(a)(11) of the Advisers
should state the nature of the writer’s Family managed or intended to be Act defines the term ‘‘investment
interest, any facts bearing upon the managed by the Applicant, and among adviser’’ to mean ‘‘any person who, for
desirability of a hearing on the matter, these accounts were accounts of the compensation, engages in the business
the reason for the request, and the issues Additional Family Clients (as defined of advising others, either directly or
contested. Persons may request below). Effective as of October 1, 2016, through publications or writings, as to
notification of a hearing by writing to David B. Ford, Jr.’s association with RIA the value of securities or as to the
amozie on DSK3GDR082PROD with NOTICES

the Commission’s Secretary. was terminated. Commencing October 1, advisability of investing in, purchasing,
ADDRESSES: Secretary, Securities and 2016, the advisory accounts of the or selling securities, or who, for
Exchange Commission, 100 F Street NE, Family Clients managed by RIA were compensation and as part of a regular
Washington, DC 20549. Applicant, 1112 transition to the Applicant. business, issues or promulgates analyses
Partners, LLC, c/o Ingrid R. Welch, Esq., 4. The Applicant represents that: (i) or reports concerning securities. . . .’’
Each of the persons served by the 2. The Applicant falls within the
18 17 CFR 200.30–3(a)(12). Applicant is a Family Client (i.e., the definition of an investment adviser

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Document Created: 2018-11-02 09:52:15
Document Modified: 2018-11-02 09:52:15

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice.
Dates		The application was filed on January 17, 2017, and amended on May 8, 2017; September 15, 2017; and March 9, 2018.
Contact		James D. McGinnis, Senior Counsel, at (202) 551-3025 or Holly L. Hunter-Ceci, Assistant Chief Counsel, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 19853