CFTC Staff Letter 00-97: Extension of No-Action Relief from CPO and CTA Registration for State-Regulated Insurance Company

00-97
CFTC Letter No. 00-97
September 24, 2000
No-Action
Division of Trading & Markets
Re: Section 4m(1) of the Act: -- Request for Extension of Previously-Issued Relief from CPO and CTA Registration for Certain State-Regulated Insurance Companies and a State-Regulated Trust Company. Dear :
This is in response to your letter dated September 8, 2000, to the Division of Trading and Markets (the “Division”) of the Commodity Futures Trading Commission (the “Commission”), as supplemented by telephone conversations with Division staff. By your correspondence, you request extension of no-action positions the Division took by letter dated June 24, 1997 (Staff Letter 97-53)1 to include your client “L”. Based upon the representations contained in your correspondence, we understand the pertinent facts to be as follows. In Staff Letter 97-53, the Division stated that it would not recommend that the Commission take any enforcement action against “J” and “M” (referred to collectively in the letter as “N”) or “O”, or against “P” when acting as a co-trustee with “O”, for failure to register as a commodity pool operator ("CPO") or commodity trading advisor ("CTA") pursuant to Section 4m(1) of the Commodity Exchange Act (the "Act")2 in connection with the proposed offering and operation of an estate planning device designed jointly by “N”, “O” and “Q”, a registered CPO (“Q”). Specifically, this device involves variable life insurance policies and variable joint and last survivor insurance policies (the “Contracts”) offered to certain trusts (the “Trusts”) established by persons who are “qualified eligible persons as defined in Commission Rule 4.7.3 All or part of the premiums paid on account of the Contracts and placed in a separate account of “N” (the "Separate Account") could be invested in limited liability trading vehicles, including commodity pools. Now, “L” would like to be able to perform the same functions as “N” in the context of the transactions contemplated by Staff Letter 97-53, including issuance of the Contracts in accordance with state insurance laws, and establishing a Separate Account into which the premiums paid on account of the Contracts will be placed, comprising one or more subaccounts, including an LP Subaccount for investment of the premiums, all as more fully described in Staff Letter 97-53. As represented to the Division, the Contracts were to have been offered by “N” on a private placement file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/00letters/tm00-97.htm (1 of 3) [5/6/2010 6:22:09 PM]