CFTC Staff Letter 95-66: No-Action Position on 10% Investment Restriction in Rule 4.7 for Rule 4.12(b) Pools

DIVISION OF
COMMODITY FUTURES TRADING COMMISSION 2033 K Street, NW, Washington, DC 20581 (202) 254- 8955 (202) 254- 8010 Facsimile TRADING AND MARKETS Dear July 19, 1995 Re: Rule 4.7(a) (1) (ii) (B)(~) (xi) --Request for Relief from 10% Limit on Assets Invested in Exempt Pools by a Qualified Eligible Participant This is in response to your letter dated November 11, 1994 to the Division of Trading and Markets (the "Division") of the Commodity Futures Trading commission (the "Commission"), as supplemented by letters of "A" dated November 23, 1994 and June 12, 1995, your memoranda dated December 14, 1994 and June 21, 1995 and by telephone conversations with Division staff ("the Correspon￾dence"). By the Correspondence, you re<f.4est relief from the restriction in Rule 4.7(a) (1) (ii) (B)(~) (xi)~/ on the percentage of assets that a pool may invest in Rule 4.7 exempt pools where the investor pool is intended to constitute a qualified eligible participant ( "QEP") but where some of the participants in the investor pool are not QEPs. You reque9t this relief in connection with participation by "X" in "Y" .~1 The Correspondence also seeks confirmation that "Z", in operating "X" pursuant to a claim of exemption under Rule 4.12 (b) (a "Rule 4.12 (b) Pool"), may continue to multiply "X' s" investment in "Y" by ten percent in 1/ Commission rules referred to herein are found at 17 C.F.R. Ch. 1 (1994). ~/ By his November 23, 1994 letter "A" stated:
"Y" and each of its general partners hereby concur in "X' s" request for relief from the 10% ceiling. Please be advised, however, that neither "Y" nor its general partners (i) have received a copy of "X's" request to the CFTC seeking.such relief, or (ii) make any repre￾sentation regarding the accuracy or complete￾ness of any statements contained in "X' s" request.