# Form ADV — Family Office Exclusion

**Status:** DONE — NOT REQUIRED
**Closed:** 2026-03-09
**Owner:** Ace

## Conclusion

Form ADV is **not required** for Palace Fund LLC. Palace Fund qualifies for the SEC family office exclusion under Rule 202(a)(11)(G)-1, which excludes qualifying family offices from the definition of "investment adviser" entirely. This is a complete exclusion — not a filing exemption — meaning no SEC or state registration, no Form ADV filing, and no ongoing reporting obligations under the Investment Advisers Act.

## Legal Basis

### Primary: Family Office Exclusion

**Investment Advisers Act of 1940 (15 U.S.C. § 80b-1 et seq.)**
- **§ 202(a)(11)** — Defines "investment adviser." Only entities that fall within this definition are subject to the Act's requirements.
- **§ 202(a)(11)(G)** — Excludes "any family office" as defined by SEC rule from the definition of investment adviser.
- **SEC Rule 202(a)(11)(G)-1** (17 C.F.R. § 275.202(a)(11)(G)-1) — Defines "family office" and implementing conditions. Entities meeting all three conditions are **excluded** from the Act's jurisdiction entirely.

**Three conditions — all met:**
1. Advises only "family clients" — defined in Rule 202(a)(11)(G)-1(d)(4) as lineal descendants and their spouses. Junwon (son) + Sungho (father) qualify. ✓
2. Wholly owned and controlled by family members — 100% family ownership, Junwon as sole Managing Member. ✓
3. Does not hold itself out as an investment adviser — no public solicitation, no advertising, no outside capital. ✓

AUM and member count are irrelevant to the exclusion analysis.

### Fallback (Not Applicable — Documented for Reference)

If the family office exclusion were ever challenged (e.g., outside investors added, public advertising), Palace Fund would qualify for the **Private Fund Adviser Exemption**:
- **§ 203(m) of the Investment Advisers Act** — Exempts advisers with AUM under $150M who advise only qualifying private funds.
- **Investment Company Act of 1940, § 3(c)(1)** — Qualifies Palace Fund as a private fund (≤100 beneficial owners, no public offering).
- **Rule 204-4** (17 C.F.R. § 275.204-4) — Sets ERA filing requirements under § 203(m). Would require truncated Form ADV Part 1A only (not Part 2A).

This fallback path would require ERA filing. It is not needed under current facts.

### State Registration

California does not independently require registration when the federal exclusion applies. No state-level Form ADV or equivalent filing is required.

## Research Report

See [[form-adv-family-office-exclusion]] in research/fund/us/.

## Checklist

- ~~Create IARD/CRD account~~ — Not required
- ~~Complete Form ADV Part 1A~~ — Not required
- ~~File electronically via IARD~~ — Not required
- [x] Confirmed family office exclusion applies — 2026-03-09
- [x] Confirmed no state filing required — 2026-03-09
- [x] Documented fallback ERA path — 2026-03-09
- [x] Research report written — 2026-03-09
- [x] tasks.md updated — 2026-03-09