CFTC Staff Letter 03-02: No-Action Position on CPO Registration for Co-General Partner and Pool Directors Permitting QEP Participation

CFTC Letter 03-02
CFTC Letter No. 03-02
December 23, 2002
Interpretation
Division of Clearing and Intermediary Oversight Re: Section 4m(1) of the Act: “P” -- Request for continued effectiveness of existing CPO registration no￾action position with respect to the administrative general partner of a pool if United States persons who are QEPs are permitted to participate in the pool.
Section 4m(1): “R” – Request for continued effectiveness of CPO registration no-action position with
respect to the directors of an investor pool where an affiliated registered CPO is the CPO of the investee pool Dear :
This is in response to your letter dated October 1, 2002, to the Division of Clearing and Intermediary Oversight (the “Division”) [1] of the Commodity Futures Trading Commission (the “Commission”), as supplemented by your e-mail message dated November 14, 2002 and by telephone conversations with Division staff. By your correspondence, you request confirmation that any person meeting the “qualified eligible person” criteria of Rule 4.7(a)[2] may participate in the “Partnership” without vitiating continued effectiveness of the no-action positions the Division took by letter dated January 16, 1997 (the “1997 Letter”), as modified by the Division’s letter dated January 11, 2001 (the “2001 Letter”) with respect to your client “P.” [3] In the 1997 Letter, the Division stated that it would not recommend that the Commission take any enforcement action against “P” for failure to register as a commodity pool operator ("CPO") pursuant to
Section 4m(1) of the Commodity Exchange Act (the "Act")[4] in connection with acting as a co-general
partner of the Partnership. The Division took this position based upon, among other things, the facts that “P” was under common ownership and control with “S” [5] a registered CPO “Q”, and that “Q” had exclusive responsibility for, and authority to perform, the functions ordinarily performed by a CPO with respect to the Partnership. The 1997 Letter required compliance with the following conditions: (1) as co￾general partner with “P” in the Partnership, “W” was (and would remain) a registered CPO; (2) no marketing activity for the purpose of soliciting United States persons to participate in the Partnership would be undertaken by “P”, “Q”, the Partnership or any person affiliated with them; and (3) any United States person soliciting investors for the Partnership would be registered as an associated person (“AP”) of “Q”. In addition, “Q” and “P” provided cross acknowledgments of joint and several liability for any violation of the Act or Commission rules by either of them in connection with the operation of the Partnership. file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/03letters/tm03-02.htm (1 of 3) [5/6/2010 5:38:23 PM]