CFTC Staff Letter 95-27: No-Action Relief from CPO and CTA Registration for Mortgage Company Hedging

DIVISION OF
TRADING AND MARKETS
Dear
COMMODITY FUTURES TRADING COMMISSION 2033 K Street, NW, Washington, DC 20581 (202) 254-8955 (202) 254-8010 Facsimile February 16, 1995 Re: Section 4m(1): Request for Exemption from CPO and CTA Registration This is in response to your letter dated December 15, 1994, to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by letter dated February 1, 1995, and telephone conversations with Division staff. By your letter you request on behalf o"f ("Com￾pany"), a Maryland corporation, that the Division grant the Company relief from registration as a commodity pool operator ("CPO") in connection with certain commodity interest trading activities in which tne Company intends to engage, as described more fully below.1./ Based upon the representations made in your letter, as supplemented, we understand that the facts are as follows. The Company was incorporated in April of 1994 for the purpose of acquiring, holding and managing first lien mortgage loans originat￾ed by others on single-family, multifamily and commercial real estate properties throughout the United States and securities backed by such mortgage loans. The Company will elect to be subject to tax as a real estate investment trust ( "REIT") under the Internal Revenue Code of 1986, as amended, and has marketed itself as a REIT in its private placement memorandum ("Private Placement Memorandum 11 ) • The Company recently completed an offering of "Units," each Unit consisting of one share of·convertible preferred stock and one stock purchase warrant, in a private offering (the "Private Placement") exempt from registration under the Securities Act of 1933 ("1933 Act"), pursuant to Section 4(2) of the 1933 Act and Regulation D promulgated thereunder. The Units were offered and 1./ Although not specifically requested, based upon telephone conversations with Division staff, this letter also addresses the applicability of commodity trading advisor registration require￾ments in connection with the Company's activities.