CFTC Staff Letters Archive

CFTC Staff Letters Archive provides Letters from 2007 and earlier. For Letters published 2008 or later visit the All Letters page.

There are no Advisory Letters or Other Written Communications for 2007 or earlier.

Date	PDF and Description
09/25/1997	97-75 ; Rule 4.7(a);; No-Action The Division of Trading and Markets provided relief under Rule 4.7(a) to a registered CPO, notwithstanding the presence of a non-QEP in its pool, where the non-QEP is a trust established by the Chairman of the CPO for the sole benefit of the Chairman's two teenage sons. The non-QEP trust has ready access to information pertinent to an investment in the pool and agrees to being treated as a QEP.
09/24/1997	97-81 ; Rule 3.1;; No-Action The Division of Trading and Markets denied the request of an individual that he not be required to be listed as a principal of two affiliated firms for which his title was "senior vice president." The Division noted that the Commission had previously interpreted the term "principal" to include any vice president. In addition, since the individual was already registered as an associated person of both firms the Division stated that the only additional step required would be for the two firms to each file a Form 3-R to amend their respective Form 7-Rs to add the individual as a principal.
09/24/1997	97-78 ; Rule 4.10(d)(1) and Rule 4.7(a)(1)(ii)(B)(2)(viii);; No-Action The Division of Trading and Markets found that a partnership consisting of a wife and her ex-husband, two trusts for the benefit of their children, a trust for the benefit of the wife, the ex-husband's current spouse, the wife's sister-in-law and a trust for her benefit, the sister-in-law's children and trusts for their benefit, the sister of the sister-in-law and the sister-in-law's grandson was not a commodity pool within the meaning and intent of Rule 4.10(d)(1) and, consequently, that the General Partners were not CPOs thereof. Because the partnership qualified for treatment as a QEP under Rule 4.7(a)(1)(ii)(B)(2)(viii), the Division did not address the request for relief from the ten percent restriction imposed on the assets of a Rule 4.7(a) exempt pool that may be used to purchase units in other Rule 4.7(a) exempt pools where not all investors in the investor fund will be QEPs.
09/24/1997	97-76 ; Rule 4.7(a);; No-Action The Division of Trading and Markets provided relief under Rule 4.7(a) to a registered CPO, notwithstanding the presence of non-QEPs in its pool, where the non-QEPs are employees of the CPO who hold high level director or officer positions with the CPO and who perform as analysts and portfolio managers for the pool. The non-QEPs have ready access to information pertinent to an investment in the pool and agree to being treated as QEPs.
09/23/1997	97-82 ; Section 4m(1) of the Act;; No-Action Trust investment manager not required as a CPO or CTA and Trustee not required to register as a CPO where, among other things: (l) the Trust would trade in compliance with the trading requirements of Rule 4.5(c)(2); (2) the Trust contained only two United States persons as investors, an investment vehicle operated pursuant to Rule 4.7 and a subsidiary of public cooperation; and (3) the two United States persons would not own, in the aggregate, more than two percent of the Trusts outstanding shares.
09/17/1997	97-95 ; Rule 4.7 (a);; No-Action The CPO of an employee limited partnership (the Fund) which consisted of sophisticated, senior management employee could claim relief pursuant to Rule 4.7(a) with respect to the operation of the Fund, could treat the Fund as a QEP for the purpose of investing more than ten percent of the Fund's assets in other Rule 4.7(a) Exempt Pools, and was not required to provide quarterly reports to Fund participants. In addition, the CTA for the Fund could treat the Fund as a qualified eligible client pursuant to Rule 4.7(b). This relief was based upon, among others, representations that all Fund participants were sophisticated investors, had ready access to information regarding the Fund's operation and investments, and would be provided with a detailed offering memorandum and annual report.
09/16/1997	97-77 ; Section 4m(1) - Requirement to register as a CPO;; No-Action CPO registration relief was provided to the operator of a partnership that traded commodity interests based upon, among others, representations that participants were Commission registrants, certain of their current and former employees and certain of their current and former family members.
09/15/1997	97-86 ; Rule 4.7(a) and Rules 4.21 - 4.26;; No-Action The Division of Trading and Markets granted "no-action" relief permitting the registered CPO of a Rule 4.7 exempt pool to admit as a participant an investor pool composed entirely of five employees of the Rule 4.7 exempt pool, each of whom (1) had a least five years' relevant employment experience in the financial services industry, (2) was an accredited investor and/or had an annual income of at least $100,000, and (3) consented to QEP treatment. The investor pool was formed to enable employees to participate in profits with favorable tax treatment. A no-action position was also taken with respect to failure of the investor pool's CPO (who was also the sole principal of the Rule 4.7 exempt pool's CPO) to comply with the requirements of Rules 4.21 through 4.2 6 in operating the investor pool. Both no-action positions were taken on condition that no additional participants would be admitted to the investor pool without prior approval of the Division. Among the factors considered in granting relief was the representation by the CPO that the five employees were "knowledgeable employees" of the Rule 4.7 exempt pool (as the term "knowledgeable employee" is defined in new Rule 3c-5(a) (4) under the Investment Company Act of 1940).
09/10/1997	97-80 ; 1a(5);; No-Action The Division of Trading and Markets provided interpretative guidance in response to any inquiry concerning whether a futures commission merchant (FCM) needed to register as a commodity trading advisor (CTA) if it solicited and managed retail customer accounts. The Division noted that Section la(5) of the Commodity Exchange Act provides a statutory exclusion from the CTA definition for certain categories or persons, among which are FCMs, who provide commodity interest trading advice in a manner "solely incidental" to the conduct of their business or profession. The Division noted that as a general rule, the Commission has not required an FCM which manages a customer's commodity interest account to register as a CTA so long as the firm is acting as an FCM with respect to the account, i.e. carrying the account on its books and accepting customer funds in a connection with commodity interest transactions.
09/05/1997	97-83 ; Section 4m(1);; No-Action The Division of Trading and Markets granted "no-action" relief from the requirement to register as a CPO with respect to the Board of Managers of a commodity pool organized as a limited liability company, and with respect to a registered CTA and registered investment adviser (RIA) that acted as the pool's investment manager (and to which the Board of Managers had delegated extensive authority regarding the management and operation of the pool). Participants in the pool were all existing accredited investor clients of the CTA/RIA and a registered broker-dealer that acted (with the CTA/RIA) as the pool's co-placement agent. Relief was conditioned upon: (1) the CTA/RIA remaining registered as a CTA and as an RIA: (2) the pool being closed to new participants and having as participants only exiting clients of the co-placement agents; (3) participants having purchased their interests by contributing securities encumbered by transfer restrictions or with substantial unrealized capital gain; (4) the pool was constructed to mirror the performance of the S&P 500 index; and (5) commodity interest trading was limited pursuant to Rule 4.5(c)(2)(I).