CFTC Staff Letter 02-115: No-Action Position on CPO Registration for Investment Adviser Managing Canadian Pension Plan

CFTC Letter 02-115
CFTC letter No. 02-115
November 27, 2002
Interpretation
Division of Clearing and Intermediary Oversight Re: Section 4m(1) -- Request for CPO Registration No-Action Position Dear :
This is in response to your letter dated August 1, 2002, to the Division of Clearing and Intermediary Oversight (the “Division”) [1] of the Commodity Futures Trading Commission (the “Commission”), as supplemented by the e-mail message of “A” of your firm, dated August 9, 2002, your e-mail messages dated August 23, 2002, September 30, 2002 and October 7, 2002, and telephone conversations with Division staff. By your correspondence, you request on behalf of “X” assurance that the Division will not recommend that the Commission commence any enforcement action based upon the failure of “X” to register under Section 4m(1) of the Commodity Exchange Act (the “Act”) [2] as a commodity pool operator (“CPO”) in connection with providing certain services to a Canadian pension trust (the “Canadian Trust”), which is comprised of the assets of the the “Canadian Plan”. Based upon the representations made in your correspondence, we understand the facts to be as follows. “X” is a direct, wholly-owned subsidiary of “Y”, and it is registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940[3] as an investment adviser. “X” is in the process of registering as an Adviser under the Ontario Securities Act (the “SA”).[4] The Canadian Plan was established by “Z”, an Ontario corporation which is also an administrator of the Canadian Plan. The Canadian Plan is noncontributory, in that it is wholly-funded by “Z” with no employee contributions. The Canadian Trust was formed by “Z” to comply with requirements of the Pension Benefits Act (Ontario) (“PBA”) and the Income Tax Act (Canada) that assets of a Canadian pension plan be held separately in a trust or other qualified funding medium.[5] Once “X” becomes registered as an Adviser under the SA, “X” will provide advice and assistance to “Z” with respect to investment of the Canadian Plan’s assets pursuant to an investment management agreement with “Z”. [6] In addition, pursuant to delegated authority from “Z”, “X”: (1) will select, hire and terminate Sub-Advisers; (2) will allocate assets among Sub-Advisers; (3) will manage the relationship with the Canadian Plan’s trustee; and (4) will hire and fire futures commission merchants (“FCMs”) used by the Canadian Plan and the Canadian Trust. You seek CPO registration relief for “X” because it is a named fiduciary of the Canadian Plan and, as file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/02letters/tm02-115.htm (1 of 4) [5/6/2010 5:52:45 PM]