Adler Management, L.L.C.; Notice of Application, 15498-15499 [E6-4430]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 71, Number 59 (Tuesday, March 28, 2006)]
[Notices]
[Pages 15498-15499]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-4430]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IA-2500/803-187]


Adler Management, L.L.C.; Notice of Application

March 21, 2006.
AGENCY: Securities and Exchange Commission (SEC).

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

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Applicant: Adler Management, L.L.C. (``Applicant'').

Relevant Advisers Act Sections: Exemption requested under section 
202(a)(11)(F) from section 202(a)(11).

Summary of Application: Applicant requests that the SEC issue an order 
declaring it and its employees acting within the scope of their 
employment to be persons not within the intent of section 202(a)(11), 
which defines the term ``investment adviser.''

Filing Dates: The application was filed on July 25, 2005, and amended 
on January 31, 2006.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
Applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on April 13, 2006, 
and should be accompanied by proof of service on Applicant, in the form 
of an affidavit or, for lawyers, a certificate of service. Hearing 
requests should state the nature of the writer's interest, the reason 
for the request, and the issues contested. Persons may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090. Applicant, Adler Management, L.L.C., c/
o Luz Campa, 10350 Bren Road West, Minnetonka, Minnesota 55343.

FOR FURTHER INFORMATION CONTACT: Catherine E. Marshall, Senior Counsel, 
or Jennifer Sawin, Assistant Director, at (202) 551-6787 (Division of 
Investment Management, Office of Investment Adviser Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch.

Applicant's Representations

    1. Applicant was organized in 1996 to serve exclusively as a 
``family office'' for the members of the Rauenhorst family, its 
entities and charities. Applicant states this will continue to be the 
sole purpose for its existence. Applicant provides services to: (i) 
Gerald and Henrietta Rauenhorst, their lineal descendants (including by 
adoption) and spouses of their lineal descendants (the ``Rauenhorst 
Family''); (ii) entities that receive investment advisory services from 
Applicant that are beneficially and solely owned by (with one exception 
as provided herein) or solely for the benefit of various members of the 
Rauenhorst Family, and several entities that do not and will not 
receive investment advisory services from Applicant and each of which 
is majority-owned by members of the Rauenhorst Family and is also owned 
by employees or former employees of Applicant (``Rauenhorst Family 
Entities''); and (iii) charitable entities that were created by and are 
administered under the discretion of members of the Rauenhorst Family 
(``Rauenhorst Family Charities''). (Persons receiving services from 
Applicant are referred to herein as ``Clients''. Clients that receive 
investment advisory services from Applicant are referred to herein as 
``Advisory Clients''.)
    2. Applicant is owned exclusively by members of the Rauenhorst 
Family and its Board of Directors is composed exclusively of members of 
the Rauenhorst Family. Applicant's Board of Directors oversees all 
aspects of Applicant's operations.
    3. Applicant represents that as a ``family office'', it provides a 
wide range of general management services to Clients, including budget 
preparation and management services; recordkeeping, bookkeeping and 
accounting services; federal and state tax return preparation services; 
real asset management services; insurance and risk management services; 
custodian and executor services; estate planning services; federal and 
state tax planning; coordination with accountants and attorneys; 
investment advisory services; and other administrative services.
    4. Applicant represents that the fees it receives cover only its 
costs and are not intended to generate a profit.
    5. Applicant represents that it does not hold itself out to the 
public as an investment adviser. Applicant represents that it is not 
listed in any phone book as an investment adviser or in any other 
directory as an investment adviser.
    6. Applicant represents that it does not engage in advertising and 
that it will not solicit or accept as a client any person who is not a 
member of the Rauenhorst Family, a Rauenhorst Family Entity or a 
Rauenhorst Family Charity.

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 * * *.'' Section 
202(a)(11)(F) of the Advisers Act authorizes the SEC to exclude from 
the definition of ``investment adviser'' persons not within the intent 
of section 202(a)(11).
    2. Section 203(a) of the Advisers Act requires investment advisers 
to register with the SEC except as provided in section 203(b) and 203A. 
Section 203(b) of the Advisers Act provides exemptions from this 
registration requirement.
    3. Applicant represents that it currently relies on the 
registration exemption provided in section 203(b)(3) of the Advisers 
Act because it only has thirteen (13) clients. Applicant represents, 
however, that this exemption is operating as a constraint on its 
ability to provide advisory services to Clients, as children in the 
Rauenhorst Family cease to be minors and leave their childhood 
households. Applicant represents that it is not eligible for any other 
registration exemptions provided in section 203(b) and that it is not 
prohibited from registering with the SEC under section 203A(a) because 
Applicant has assets under management of not less than $25,000,000.
    4. Applicant requests that the SEC issue an order pursuant to 
section 202(a)(11)(F) declaring it and its employees acting within the 
scope of their employment to be persons not within the intent of 
section 202(a)(11).
    5. Applicant states that there is no public interest in requiring 
it to be registered under the Advisers Act. Applicant states that it 
was formed to be

[[Page 15499]]

the ``family office'' for the Rauenhorst Family. Applicant represents 
that all of its clients are members of the Rauenhorst Family, 
Rauenhorst Family Entities or Rauenhorst Family Charities. Applicant 
further asserts that the interests of the Applicant, its employees and 
its Clients are closely aligned because Applicant is owned exclusively 
and controlled by members of the Rauenhorst Family; Applicant's 
employees are fully accountable to Applicant's Board of Directors, 
which consists exclusively of members of the Rauenhorst Family; and the 
Clients are all either members of the Rauenhorst Family, Rauenhorst 
Family Entities and Charities. Applicant represents that only one 
person who is not a Rauenhorst Family member has any beneficial 
interest in a Rauenhorst Family Entity that is an Advisory Client of 
Applicant. This person is a long-standing loyal family employee, and he 
will not be permitted to increase his existing investment or to invest 
in other Rauenhorst Family Entities. Applicant states that apart from 
this isolated exception, it will prohibit persons that are not members 
of the Rauenhorst Family, Rauenhorst Family Charities or Rauenhorst 
Family Entities from investing in Rauenhorst Family Entities that are 
Applicant's Advisory Clients.\1\
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    \1\ Applicant further states that Rauenhorst Family Entities 
that are only majority-owned by members of the Rauenhorst Family and 
are owned by employees or former employees of Applicant do not and 
will not receive investment advisory services from Applicant.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Nancy M. Morris,
Secretary.
 [FR Doc. E6-4430 Filed 3-27-06; 8:45 am]
BILLING CODE 8010-01-P