CFTC Staff Letter 94-37: No-Action for Treating Non-QEP Foundation as Qualified Eligible Participant

DIVISION OF
TRADING AND MARKETS
COMMODITY FUTURES TRADING COMMISSION
2033 K Street, NW, Washington, DC 20581
(202) 254- 8955
(202) 254-8010 Facsimile
March 22, 1994
Re: Request to Treat Foundation as a Qualified Eligible Participant Under Rule 4.7 Dear This is in response to your letter dated January 24, 1994, as supplemented by telephone conversations with·Division staff, in which you request confirmation that "X", a registered commodi￾ty ~~ol operator ("CPO"), may continue to claim relief under Rule 4.7- in connection with its operation of the "Pool" in the event that the Foundation, a charitable foundation, which is not a qualified eligible participant ("9EP") as defined in the rule, becomes a participant in the Pool.~ You also request confir￾mation that the Foundation may be treated as a QEP of the Pool for the purposes of Rule 4.7 . .. Based upon the representations made in your letter, as supplemented, we understand the pertinent facts .to be as follows. The Foundation is an organization satisfying the criteria set forth in section 501(c) (3) of the Internal Revenue Code, with approximately $1,000,000 in assets. All distributions of the Foundation's income are made to charities. It was created by "A" and "B" who, with their adult children and their adult children's spouses (collectively the "C" Family"), serve as directors and officers of the Foundation. The "C" Family has·assets in excess of $100 million. All investment decisions for the Foundation are made by "D", "A"' s brother. "D" is a QEP, an equity partner in "X", has forty-four years of investment experience and was the 1./ Commission rules referred to herein are found at 17 C.F.R. Ch . I ( 19 9 3 ) .. ~/ The Pool currently has as participants a few trusts and a charitable foundation which are non-QEPs. Pursuant to discus￾sions between "X'''s counsel and Division staff and correspondence from "X'"s counsel to the Division dated December 28, 1992 and January 4, 1993, "X" was permitted to continue to claim relief under Rule 4.7 despite the investment of these trusts and the charitable foundation in the Pool.