CFTC Staff Letter 02-82: Exemption from Independent Accountant Certification for Small Fund's 2001 Annual Report

CFTC Letter 02-82
CFTC Letter No. 02-82
July 3, 2002
Exemption
Division of Trading and Markets
X
XX
XXX
XXXX
XXXXX
XXXXXX
XXXXXXX
Dear X:
This is in response to your letters dated March 17, May 6 and June 27, 2002 to the Division of Clearing and Intermediary Oversight (“Division”) of the Commodity Futures Trading Commission (“Commission”), requesting exemptive relief from the requirement of Rule 4.22(d)[1] that the financial statements prepared for the Annual Report be certified by an independent public accountant. The request is filed on behalf of XX, the commodity pool operator (“CPO”) for Y (the “Pool”). Rule 4.22(c) requires each registered CPO to file an Annual Report with the Commission and distribute copies to pool participants within 90 calendar days of the end of the pool’s fiscal year. Rule 4.22(d) requires that the financial statements in the Annual Report must be prepared in accordance with generally accepted accounting principles and certified by an independent public accountant. The principal purpose of financial reporting required by Rule 4.22 is to ensure that pool participants receive accurate, fair and timely information on the overall trading performance and financial condition of the pool. You request exemption from filing an audited financial report for 2001 due to the fact that the pool did not begin trading until November 2001, and has only one U.S. participant. Based on the representations you have submitted in support of your request, it appears that the Pool commenced trading commodity interests in November 2001. As of December 31, 2001, the net asset value of the Pool was $5,655,276. You have submitted a statement in support of this exemption from the only U.S. participant and state that all non-U.S. persons, that are participants in the Pool, are aware of and approve the issuance of a single audited annual report covering the period November 1, 2001 through December 31, 2002. You have also submitted unaudited statements for the months of November and December 2001, the entire operating history of the Pool. You further state that if the exemption is granted, a certified annual report covering the 14-month period from November 1, 2001 to December 31, 2002 will be issued to all participants and filed with the Commission. In light of the representations made in your letter, in particular those relating to the small number of U.S. file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/02letters/tm02-82.htm (1 of 2) [5/6/2010 5:52:39 PM]

CFTC Letter 02-82 participants in the Pool, the Division believes that granting the request on behalf of the CPO is neither contrary to the purposes of Rule 4.22 nor to the public interest. Accordingly, pursuant to the authority delegated by Rule 140.93(a)(1), XX is hereby granted relief from the certification requirement of Rule 4.22(d) for the Pool’s fiscal year ending December 31, 2001. The relief granted in this letter is conditioned on the following: First, the CPO must distribute an unaudited Annual Report for the Pool that otherwise complies with Rules 4.22(c) and (d). The unaudited Annual Report should be filed with the Commission and National Futures Association within 90 calendar days of the end of the pool’s fiscal year. Second, the CPO must file, on behalf of the Pool, a certified financial report for fiscal year 2002, which covers the 14-month period from November 1,2001 through December 31, 2002. This letter in no way shall excuse XX or Y from compliance with any other applicable requirements contained in the Commodity Exchange Act[2] or in the Commission’s regulations issued thereunder. This letter, and the exemption granted herein, is based on the representations that have been made to the Division. Any different, changed or omitted facts or conditions might render the exemption void. You must notify the Division immediately in the event the operations of the CPO or the Pool change in any material way from those represented to us. If you have any questions regarding this letter, please contact me or Don Bass, a Futures Trading Specialist on my staff, at (202) 418-5462. Very truly yours, Kevin P. Walek Assistant Director (202) 418-5463 cc: Regina Thoele, Compliance National Futures Association [1] Commission rules referred to herein are found at 17 C.F.R. Ch. I (2001). [2] 7 U.S.C. § 1 et seq. (2000). file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/02letters/tm02-82.htm (2 of 2) [5/6/2010 5:52:39 PM]