CFTC Staff Letter 94-75: No-Action for Treating Family Investment Vehicle as Qualified Eligible Participant

DIVISION OF
TRADING AND MARKETS
Dear
COMMODITY FUTURES TRADING COMMISSION 2033 K Street, NW, Washington, DC 20581 (202) 254 - 8955 (202) 254- 8010 Facsimile June 23, 1994 Re: Request for Relief under Rule 4.7 This is in response to your letter dated June 1, 1994 to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by telephone conversations with 11our associate, "I", wherein you request relief from Rule 4.7~' on behalf of the general part￾ners ("GPs") of (the "Partnership"), each of whom/is registered as a commodity pool operator with the Commission~ and has filed a notice under Rule 4.7 with respect to the operation of the Partnership.~/ Based upon the representations you have made to us, as·· supplemented, we believe· your request has merit. Accordingly, the Division will not recommend that the Commission take any enforcement action for failure to comply with Rule 4.7 against the GPs if they treat the "X" Family as a "qualified eligible participant" for the purpose of complying with Rule 4.7 and, notwithstanding the participation of the "X" Family, they invest more than ten percent of the Partnership's assets in Rule 4.7 exempt pools. This position is based upon, among others, your representations that: (1) the "X" Family is a family investment vehicle created by a QEP in the Partnership; (2) its limited partners are immediate family members of the QEP' or trusts created for their benefit; and (3) its assets exceed $5 million. This letter does not excuse the GPs from compliance with any otherwise applicable requirements contained in the Commodity ~/ Commission rules referred to herein are found at 17 C.F.R. Ch . I ( 19 9 3 ) . ~I Your letter identifies the GPs as follows: "A", "B" I "C", "D", "E", "F", "G" and "H". ~/ Commission records indicate that the notice was filed on February 15, 1994.

Exchange Act (the "Act")!!/ or the Commission's regulations issued thereunder. For example, they each remqin subject to the antifraud provisions of Section 4Q of the Act21 and to the reporting requirements for traders set forth in Parts 15, 18 and 19 of the regulations. Moreover, this letter is applicable to the GPs solely in connection with their operation of the Partner￾ship. This letter is based upon the representations that you have made to us. Any different, changed or omitted facts or condi￾tions might require us to reach a different conclusion. In this connection, we request that you notify us immediately in the event the operations and activities of the "X" Family change in any way from those as represented to us. This letter represents the position of the Division of Trading and Markets only. It does not necessarily reflect the views of the Commission or any other office or division of the Commission. If you have any questions concerning this correspon￾dence, please feel free to contact me or Barbara S. Gold, Assis￾tant Chief Counsel, at (202) 254-8955. !!I 21 Very truly yours, Susan C. Ervin Chief Counsel 7 U.S.C. § 1 et seq. (1988 & Supp. IV 1992). 7 u.s.c. § 6Q.