CFTC Staff Letters

The CPO of a commodity pool that commenced trading in October of 2008 requested relief from Commission Regulation 4.22 (d), which requires certification of the pool’s annual report. The pool had, as of the close of its fiscal year, $1,XXX,XXX in total assets and nine participants. The CPO submitted signed waivers from each of the pool’s participants consenting to the exemption from the certified annual relief requirement. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a), but conditioned such relief upon the future filing of a certified annual report for the period of October 1, 2008 through December 31, 2009 in accordance with Regulations 4.22(c) and (d).

The CPO of a master fund and two feeder funds whose sole investment was in the master fund requested an interpretation or exemption with respect to the due date of the final annual report for one of the feeder funds that ceased operation as of June 30, 2008. Participants in the feeder fund that was ceasing operation exchanged their units for units in the second feeder fund. The CPO proposed that, rather than filing an annual report by September 30, 2008 for the feeder fund ceasing operation, it be permitted to file the report by March 31, 2009. The CPO claimed that the participants were not redeeming their investments, and represented further that there would be an additional cost in preparing a mid-year report because additional information from the master fund as of June 30, 2008 would be necessary. DCIO clarified that the fund did, in fact, cease operation as of June 30, 2008 and therefore its report was due within 90 days, but provided an extension of the report’s due date to March 31, 2009 on the basis that participants were transferred into a nearly identical investment and would continue to receive periodic reports on the value of their investment prior to the issuance of the fund’s final annual report.

The CPO of three commodity pools requested relief to use IFRS in lieu of US GAAP. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of a proprietary commodity pool (consisting only of the CPO and the CPO’s mother) requested relief from Commission Regulation 4.22(d), which requires certification of the pool’s annual report. The pool had, as of the close of its fiscal year, only $4XX,XXX in total assets, and the pool’s participants had received monthly account statements prepared by an unassociated third-party accounting firm. The CPO submitted signed waivers from each of the pool’s participants consenting to the exemption from the certified annual relief requirement. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of commodity pool requested relief to use IFRS in lieu of US GAAP. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of commodity pool requested relief to use IFRS in lieu of US GAAP. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of two commodity pools requested relief to use IFRS in lieu of US GAAP. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a).

The CPO of a commodity pool operated pursuant to relief under Regulation 4.12 requested relief from the requirement that an Annual Report be filed within 90-days of the permanent cessation of trading as well as relief from the requirement that an Annual Report be filed within 90-days of the end of the Pool’s fiscal year. Additionally, the CPO requested relief from the certification requirement. Instead of the foregoing, the CPO proposed that it be permitted to file a 15-month Annual Report for the period from January 1, 2008 through March 31, 2009 and that this uncertified Annual Report be considered its final Annual Report for the Pool despite the fact that the Pool remains in possession of an illiquid asset, which constitutes less than one percent of the Pool’s net asset value. DCIO granted relief pursuant to Commission Regulations 140.93 and 4.12(a). The relief was conditioned on the CPO providing certain representations to participants including that the Pool has permanently ceased trading, that the CPO is no longer assessing fees against the Pool, a description of the illiquid asset, a description of the disposition of any income generated by the asset, and a representation that funds will be distributed on a pro rata basis. DCIO also required that the CPO file and distribute a final disclosure upon the disposition of the asset stating that the Pool has finally disposed of the asset.

The CPO requested relief from the requirement of Regulation 4.22(c) that the Pool file a certified Annual Report within 90 days of the end of the fiscal year on December 31, 2008. The CPO requested permission to file a single, certified Annual Report for the Pool for the 16-month period from January 1, 2008 through April 29, 2009, upon which date the Pool ceased trading and began distributing funds to participants. The CPO also requested an extension of the 90-day period from July 29, 2009 to September 30, 2009. Pursuant to the authority delegated by Regulations 140.93 and 4.12(a), the Division granted relief from the Annual Report requirement of Regulation 4.22(c) for the Pool’s fiscal year ending December 31, 2008 and denied the request for relief with respect to the 90-day filing period.

The CPO of a commodity pool with the majority of its assets embroiled in a bankruptcy requested relief from the ongoing reporting requirements under Part 4. The CPO filed an Annual Report for the Pool for the 2007 fiscal year, which contained information regarding the bankruptcy. DCIO granted relief pursuant to Regulations 140.93 and 4.12(a), but conditioned such relief on the following representations being made to the Commission and participants: the Pool has ceased trading; the pertinent facts regarding the bankruptcy and the frozen assets, including, but not limited to, the value of the assets, the percentage of the Pool’s NAV that the frozen assets represent, and the date upon which the bankruptcy petition was filed; the pertinent facts regarding the value of any assets presently being held by the Pool that have not been distributed to participants and the reasons for their retention; a representation that no additional fees will be deducted from the assets held by the Pool; the pertinent facts regarding the disposition of any income generated by the assets held by the Pool, if any; a representation regarding whether any assets have been distributed to participants; a representation regarding how payouts from the bankruptcy estate will be distributed to participants; i.e., whether distributions will be made as funds are received from the bankruptcy estate or whether payouts will be retained by the Pool until the final payout is received from the estate; a representation regarding any write down of the value of the claim against the bankruptcy estate; a representation regarding the distribution of assets on a pro rata basis to participants; and a representation that the financial information contained in the Pool’s liquidation report remains accurate. Additionally, DCIO required that the CPO make a final disclosure to the Commission and participants upon the final disbursement of the Pool’s assets.