CFTC Staff Letter 02-03: No-Action Position on CPO and CTA Registration for SEC-Registered Investment Adviser Operating ERISA Plan LLC

CFTC Letter No. 02-03
CFTC Letter No. 02-03
December 20, 2001
No-Action
Division of Trading and Markets
Re: Section 4m(1) -- Request for relief from CPO and CTA registration requirements for "V" as the operator and advisor of a collective investment vehicle for investment of assets of ERISA and government pension plans. Dear :
This is in response to your letter dated December 11, 2000, to the Division of Trading and Markets (the "Division") of the Commodity Futures Trading Commission (the "Commission"), as supplemented by your letters dated May 17, 2001 and July 27, 2001, by the letter of "A" dated October 22, 2001, and by telephone conversations with Division staff. By this correspondence, you request that the Division not recommend that the Commission commence any enforcement action against "V" in connection with the operation of the "Company" if "V" does not register under Section 4m(1) [1] of the Commodity Exchange Act (the "Act")[2] as a commodity pool operator ("CPO") and a commodity trading advisor ("CTA"). Based upon your representations, we understand the facts to be as follows. "V" "V", the sponsor of the Company, was formed in 1999 to acquire and operate the fixed-income investment management business of "W".[3] "V" is wholly-owned by "X", a corporation established in ____, which, with its predecessors, has been engaged in the banking business since ____. Although it is registered with the Securities and Exchange Commission ("SEC") under the Investment Advisers Act of 1940 (the "IAA")[4] as an investment adviser ("IA"), "V" is not registered with the Commission as a CPO or as a CTA, and you represent that it does not hold itself out to the public as a CPO or as a CTA. None of "V" or its principals or officers is subject to statutory disqualification under Section 8(a)(2) or 8 (a)(3) of the Act.[5] "V" is the Managing Member of the Company. Besides the Company, "V" currently provides commodity interest trading advice to five clients. "V" relies upon a claim of exemption from CTA registration under Commission Rule 4.14(a)(8)[6] with respect to these other clients. The Company file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/02letters/tm02-03.htm (1 of 4) [5/6/2010 5:43:50 PM]