CFTC Staff Letter 03-03: No-Action Position on CPO and CTA Registration for LLC Manager

CFTC Letter 03-03
CFTC Letter No. 03-03
December 24, 2002
Interpretation
Division of Clearing and Intermediary Oversight Re: Request for Commodity Pool Operator Registration Relief Dear :
This is in response to your letter dated September 16, 2002, to the Division of Clearing and Intermediary Oversight (the “Division”) of the Commodity Futures Trading Commission (the "Commission"), as supplemented by the e-mail messages of “A”, your Vice President, Investments and head trader, dated October 22, October 23, November 21, and November 26, 2002 and by telephone conversations with Division staff. By your correspondence, you request relief from the requirement to register as a commodity pool operator (“CPO”) or commodity trading advisor (“CTA”) under Section 4m(1) of the Commodity Exchange Act (the “Act”) [1] with respect to the “Manager”, the manager and adviser of the “LLC”. Based upon the representations made in your correspondence, we understand the facts to be as follows. The LLC The LLC was formed July 1, 2002, solely to serve the investment purposes of its members. The LLC has two members: (1) “V”, a not-for-profit membership advocacy organization for farmers in the State of “U” (the “W”);[2] and (2) “X”, a “U” property and casualty insurance company (the “Insurance Company”).[3] “V” is owned by its members in the State of “U”. It engages in legal and legislative advocacy on behalf of its members, and provides environmental and education programs and other benefits for its members, such as group discounts on farm and home-related goods and services. The Insurance Company, in turn, is owned by its policyholders, who are all members of the “W” (although not all members of “W” are policyholders of the Insurance Company). “W” and the Insurance Company have the same boards of directors. Essentially then, the members of the LLC are owned and controlled by the same persons. The LLC was formed to provide a more efficient means of investing the capital of its members than direct trading by each of its members. The LLC engages in all aspects of capital investment, including commodity interest trading. The Manager Under the terms of the LLC’s operating agreement, complete and exclusive power and responsibility for file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/03letters/tm03-03.htm (1 of 3) [5/6/2010 5:38:23 PM]