Kevin Warsh, U.S. President Donald Trump’s nominee for Chair of the Federal Reserve, prepares to testify during his Senate Committee on Banking, Housing, and Urban Affairs confirmation hearing in the Dirksen Senate Office Building on April 21, 2026 in Washington, DC.
Andrew Harnick | Getty Images
A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Kevin Warsh can credit more than $100 million of his vast fortune to a lucrative regulatory carveout that favors family office executives and investment professionals, family office attorneys told Inside Wealth.
While single-family offices are widely understood to only manage family members’ assets, a little-known exception allows certain employees to invest with the ultra-wealthy families they work for.
Warsh’s recent financial disclosures are putting the carveout on display.
The Federal Reserve chair nominee has two stakes worth at least $50 million each in a vehicle called the Juggernaut Fund, according to the filings. The fund is managed by Duquesne Family Office, the personal investment firm of billionaire hedge fund manager Stanley Druckenmiller.
Warsh joined Duquesne as a partner and advisor after leaving the Fed in 2011 and has interests in dozens of other Duquesne entities. The underlying assets in the Juggernaut Fund are not detailed, citing Warsh’s “pre-existing confidentiality agreements” with the firm.
An attorney who has advised family offices for 30 years told CNBC it’s increasingly common for family offices to structure compensation for their key employees in a similar manner to private equity firms. That could include incentive fees from investments or opportunities to co-invest capital, said the lawyer, who spoke on the condition of anonymity in order to speak freely.
Family offices often lend money to these employees in order to fund their capital commitments and forgive them over time or apply future bonuses toward the debt, the lawyer said.
Single-family offices can allow employees to co-invest thanks to a family office rule issued by the Securities and Exchange Commission in 2011. Under that rule, family offices do not have to register as investment advisors so long as they only advise or manage assets for family clients, a category that includes key employees along with family members of the firm founder.
To qualify, key employees must occupy a senior position like director or a executive officer or be involved in the firm’s investment activity, according to the SEC. Investment professionals must have held these duties at the family office or another company for at least 12 months, per the SEC.
“I think the SEC staff at the time was sympathetic to the family office community’s concerns about making investment opportunities and in-house investment staff as robust as possible,” said a lawyer at a New York City firm, who asked to remain anonymous to speak about the matter. “They recognized that attracting and retaining that type of talent required providing executives that level of compensation.”
Lawyers told Inside Wealth that Warsh likely falls under the key employee exception. Duquesne and a representative of Warsh did not respond to requests for comment.
Evan Hall, partner at investment management practice group at Haynes Boone, said the “key employee” category is somewhat flexible, however.
“If you’re an employee of the firm who participates in investment decisions, it doesn’t have to be all investment decisions for the family office,” Hall said. “People can game it a little bit. Can a consultant fit in the key-employee definition? It really seems kind of murky, but that’s a line we see a lot.”
Warsh has promised to divest his Duquesne-affiliated investments if he’s confirmed as Fed chair, but he has not disclosed how he would do so.
Lawyers who spoke with Inside Wealth said Warsh would have to sell them to the Druckenmiller family or another family client in order for Duquesne to comply with the family office rule.
“I will say that if he doesn’t have friendly partners willing to buy him out, getting out of underlying investments tends to be very difficult,” said another New York lawyer, who similarly requested to remain anonymous to speak candidly. “Otherwise it’s very difficult to get out of private investments.”
At Tuesday’s Senate Banking Committee confirmation hearing, Sen. Elizabeth Warren, D.-Mass, asked Warsh if he would sell those interests back to Druckenmiller.
“Will you disclose how you divest those assets? Or will you just collect a check for $100 million from someone whose whole business is betting on what the Fed will do?” Warren said.
Warsh said he had come to an agreement with the Office of Government Ethics, but did not give specific details about that.
Although Warsh’s nomination and wealth have cast attention on how family offices compensate their employees, lawyer Michael Schwamm, a partner at Duane Morris, said it’s unlikely that it will invite regulatory scrutiny on how key employees are defined or how many can co-invest.
He said the SEC would probably only act if an investment went bad and an employee lost their life savings and came after the firm in a public way.
“I would not be surprised if there are family officers that have tripped the line, but is this something that the SEC is actively gonna go after?” he said. “Not until something happens.”
