CFTC Staff Letter 93-111: No-Action Relief for Limited Partnership General Partner of Commodity Pool

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TRADING AND MARKETS
COMMODITY FUTURES TRADING COMMISSION 2033 K Strttt, NW, Washington, DC 20581 (202) 254 - 8955 (202) 254-8010 Facsimile November 29, 1993 Re: Request for CPO Registration Relief Dear This is in response to your letter to the Division of Trad￾ing and Markets ("Division") dated September 29, 1993, wherein you request that the Division not reco~end that the Commission take any enforcement action against "X"-for failure to register as a commodity pool operator ("CPO") in connection with it~ serving as the general partner of the "Fund". Based upon your letter, as supplemented, we understand the facts to be as follows. The general partner of the Fund is "X", a California limited partnership. The only general partner of "X" is "Y", a registered CPO. "A" and "B" are registered associated persons ("APs") and listed principals of "Y", are the only principals, officers and employees of "Y" and are the only limited partners of "X". The only business of "X" and "Y" is operating the Fund. Inasmuch as "X" will be the general I~rtner of the Fund, it will be serving as the CPO of the Fund and, absent relief, must register as a CPo.11 In support of the instant request, by !I YoU r~resent that "X" serves as the general partner of the Fund for tax reasons. Specifically, you state that:
The revenues of the general partner of the [Fund] are based on the capital appreciation of the general partner's capital account, a fixed quarterly management fee (one-quarter of one percent of the assets of the [Fund] per fiscal quarter) and an incentive allocation that complies with Rule 205-3 under the Investment Advisers Act of 1940. Each separate source of revenue is characterized differently for tax purposes. (continued ... ) _j