CFTC Staff Letter 14-146: No-Action Relief for Directed Trustees Acting as Commodity Pool Operators

U.S. COMMODITY FUTURES TRADING COMMISSION
Three Lafayette Centre
1155 21st Street, NW, Washington, DC 20581
Telephone: (202) 418-5977
Facsimile: (202) 418-5407 gbarnett@cftc.gov
Division of Swap Dealer and
Intermediary Oversight
Gary Barnett
Director
CFTC Letter No. 14-146
No-Action
November 6, 2014
Division of Swap Dealer and Intermediary Oversight Re: Request for relief from registration as a commodity pool operator when acting as a directed trustee Dear :
This is in response to your letter (the “Letter”), dated June 6, 2014, to the Division of Swap Dealer and Intermediary Oversight (the “Division”) of the U.S. Commodity Futures Trading Commission (the “Commission” or “CFTC”). In the Letter, on behalf of “B” and its affiliated state-regulated companies (collectively, “A”), you request an interpretation that “A” is not acting as a commodity pool operator (a “CPO”) within the meaning of section 1a(11) of the Commodity Exchange Act (the “Act”) 1 and Commission regulation 1.3(cc) when it acts as a “directed trustee” of certain trusts described below, and therefore is not required to register as a CPO pursuant to section 4m(1) of the Act. Background Based on the representations made in the Letter and other supplemental correspondence (the “Correspondence”), the Division understands the facts to be as follows. You state that “A” is regularly engaged to act as a “directed trustee” of trusts established under the laws of various states (each, a “Trust”) pursuant to a Trust agreement for each Trust. You state that although “A”, as a directed trustee, holds legal title to the assets of each Trust, it has limited discretionary powers. You state that each Trust’s Investment Manager, which is customarily the Trust’s sponsor, or an affiliate thereof, holds primary responsibility for the Trust’s operations from the inception of the Trust, including solicitation of, and interaction with, the Trust’s investors and trading on behalf of the Trust.