CFTC Staff Letter 04-30 (No-Action): Exemption from Rule 4.23 Books and Records Location Requirement

CFTC Letter 04-30
CFTC letter No. 04-30
October 22, 2004
Exemption
Division of Clearing and Intermediary Oversight Re: Rule 4.23 – Request for Relief from the Books and Records Location Requirement Dear :
This is in response to your letter dated October 13, 2004, to the Division of Clearing and Intermediary Oversight (the “Division”) of the Commodity Futures Trading Commission (the “Commission”). By that correspondence, you requested relief on behalf of “X”, an applicant for registration as a commodity pool operator (“CPO”), from the requirement of Rule 4.23 that a CPO maintain certain of its books and records at its main business office and in accordance with Rule 1.31.[1] Based upon the representations contained in the correspondence, we understand the facts to be as follows. You and “A” are co-owners of “X”. “X’s” main business address is in ___(the “Y” office), at “A’s” home office. Certain of “X’s” business activities, however, including accounting, tax, and compliance activities, are performed at your home office in ____ (the “Z” office), 36 miles from the “Y” office. You requested relief from the books and records location requirement of Rule 4.23 in order that “X” may maintain certain of its records, including original bank statements, legal, and tax related documents, at the “Z” office.[2] You intend to maintain other books and records, including those relating to “X’s” trading activities, at the “Y” office. Based upon the foregoing, it appears that granting your request would not be contrary to the public interest or the purposes of Rule 4.23. Accordingly, by the authority delegated under Rule 140.93(a)(1), the Division exempts “X” from the requirements of Rule 4.23 such that “X” may maintain certain of its books and records at the “Z” office. This exemption is, however, subject to the following conditions: (1) “X” will notify the Division if the location of any original books and records changes from that represented to us; (2) “X” remains responsible for ensuring that all books and records required by Rule
4.23 are maintained in accordance with Rule 1.31 and for assuring their availability to the Commission,
the National Futures Association, or any other agency authorized to review such books and records in accordance with the Commission’s regulations;[3] (3) within 48 hours after a request by a representative of the foregoing, “X” will obtain the original books and records from the “Z” office and will provide them for inspection at its main business address if the representative chooses to inspect them there; and (4) “X” discloses in its CPO Disclosure Document that certain of its books and records required under Commission Rule 4.23 are kept at its “Z” office. This exemption is further subject to the condition that other than with respect to the rule’s location requirement, “X” remains fully responsible for compliance file:///H|/Desktop/04letters/tm04-30.htm (1 of 2) [5/6/2010 5:32:08 PM]