CFTC Staff Letter 12-27: Family Investment Entity Not a Commodity Pool

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-6700
Facsimile: (202) 418-5407
Division of Swap Dealer and
Intermediary Oversight
Gary Barnett
Director
CFTC Letter No. 12-27
Interpretation
October 5, 2012
Division of Swap Dealer and Intermediary Oversight Re: Regulation 4.10(d)(1) Request for interpretation that family investment entity is not a commodity pool Dear :
This is in response to your letter dated July 12, 2012, to the Division of Swap Dealer and Intermediary Oversight (the “Division”) of the Commodity Futures Trading Commission (the “Commission” or “CFTC”), as supplemented by your letter, dated July 30, 2012, and your email messages, sent on July 30, 2012 and August 14, 2012 (collectively, the “correspondence”). By the correspondence, you request an interpretation that “A” is not a commodity pool within the meaning and intent of Regulation 4.10(d), and that, accordingly, you are not required to register with the Commission as a commodity pool operator (“CPO”) under Section 4m(1) of the Commodity Exchange Act (the “Act”) 1 in connection with your serving as the managing member of “A”. Based upon representations made in the correspondence, we understand the pertinent facts to be as follows. “A” is a family-owned, Delaware limited liability company that was formed in 2006 for the sole purpose of making investments in futures and options on futures on behalf of you and your cousin, “B” (the “Members”). 2 No person other than the Members has ever contributed any capital to or held any interest in “A”. In support of your request, you represent that “A” “has never been used to provide advice or solicit investments, receive funds, securities or property from other parties.” In further support of your request, you state that “[A’s] business model has not changed since inception and will not change.”