CFTC Staff Letter 94-39 (No-Action): Treatment of Non-QEPs as QEPs for Key Employees

DIVISION OF
TRADING AND MARKETS
COMMODITY FUTURES TRADING COMMISSION 2033 K Street, NW, Washington, DC 20581 (202) 254-8955 (202) 254-8010 Facsimile March 29, 1994 Re: No-Action Letter Relief under 4.7 Dear This is in response to your letter dated March 2, 1994, as supplemented by telephone conversations with Division staff, in which you request that the DiviE)ion permit "Y Management" to claim relief under Rule 4.7(a)11 with respect to theY Fund if "Y Management" accepts as participants in the Y Fund certain persons who are not qualified eligible participants {"QEPs") as defined in the rule. Based upon the representations made in your letter, as sup￾plemented, we understand the pertinent facts to be as follows. By letter dated March 31, 1994, the Division stated that it would not recommend that the Commission take any enforcement action against "Y Management", if "Y Management" filed a Rule 4.7 notice of claim for exemption for "X", despite the presence of certain participants who are nqt QEPs. All participants iiJ. "X" are QEPs or "Y" participants,"~/ some of whom are not QEPs.l/. Simi￾larly, only QEPs and "Y" participants will be permitted to invest in the Fund. Based on the foregoing, the Division will not recommend that the Commission take any enforcement action against "Y Management 11 based on the presence in the Y Fund of the "Y" participants who are not QEPs if "Y Management" claims relief under Rule 4.7, 1/ Commission rules referred to herein are found at 17 C.F.R. Ch . I ( 19 9 3 ) . ~I The "Y" participants are certain key employees, i.e., either general partners or senior managers, of the "Y Group" arid its affiliates (together, "Y"), and their immediate family members. You represented that no person, other than a QEP, who is not at least a vice president of "Y" and an accredited investor under Regulation D of the Securities Act of 1933 would be permitted to invest in "X".