CFTC Staff Letter 93-87: No-Action Relief from CPO and CTA Registration for Three-Person LLC

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DMSIONOF
1JW>ING AND MARKETS
Dear
COMMODTTY FUTURES TRADING COMMISSION 2033 K Strttl, NW, Washington, DC 20581 (202) 254 -8955 (202) 254 - 8010 Facsimile August 12, 1993 Re: Begyest for Relief from CPO and CTA Registration This is in response to your letter dated July 19, 1993, as supplemented by telephone conversations with Division staff, in which you request in connection with the operation of (the "Company"}, that the Division of Trading and Markets ("Division"} of the Commodity Futures Trading Commission ("Commission") grant relief to "A" from registration as a commodity po61 operator ("CPO"} and a commodity trading advisor ("CTA"). Based upon the representations made in your letter, as supplemented, we understand the relevant facts to be as follows. The Company was formed as a limited liability company under the laws of the State of Texas for the primary purpose of trading futures contracts in natural gas. The Company has three members, "A", "B" and "C" (the "Members"}, who made capital contributions totalling $800,000.!1 All of the Company's trading activities and decisions will be conducted and made by "A", who will devote his efforts to the business on a full-time basis and will be paid a salary and bonuses based o~·performance. "A" has extensive experience in tne natural gas industry, having worked his entire professional life in the industry.Y "B" and "C" will be passive investors only. The Company will not solicit or accept any other investors and "A" will not trade on behalf of any other person. You represent that each Member is an accredited investor as defined by Rule 501(a} of Regulation D of the Securities Exchange Act of 1933, as amended and is capable of withstanding the q:s-81 ; economic loss of all of his investment, if such an event would I. i !' Specifically, you represent that "A", "B"and "C" contributed $100,000, $1'15,000 and $525,000 and have ownership interests of 12.5%, 21.875% and 65.255%, respectively. Y Specifically, "A" has held positions with "X", "Y", and most recently with "Z", where, among other duties, he was in charge of all of the company's nationwide futures trading activity from April, 1991 to January, 1993.