CFTC Staff Letter 96-11: No-Action Relief for CPO Registration Exemption for Fund President with Related Members

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U.S. COMMODITY FUTURES TRADING COMMISSION Three Lafayette Centre 1155 21st Street, NW, Washington, DC Telephone: (202) 418-5430 Facsimile: (202) 418-5536 20581 DIVISION OF TRADING & MARKETS Dear January 18, 1996 Re: Section 4m(1) of the Commodity Exchange Act -- Request for Relief From Registration as a CPO Where All Other Members of Limited Liability Company are Relatives, Friends or Business Associates of President This is in response to your letter dated September 28, 1995, to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission") as s upple￾mented by telephone conversations with Division staff, whereby you request that the Division not recommend that the Commission take any enforcement action for failure to register as a commodi￾ty pool operator ("CPO") against "A" in connection with his s e rving as President of (t he "Fund"). Based upon the representations made in your letter, as supplemented, we understand the relevant facts to be as f ollows. The Fund was formed to trade solely in oil futures contracts. It is a private investment limited liability company formed by a group of individuals (the "Member s") with long-sta nding busi ness and/or personal relationships with "A". All of the Members in the Fund are "accredited investors" as defined in Rule 501(a) of Regulation D under the Securities Act o f 1933, as am~nded, a nd meet the net worth or income tests under that rule.~/ There has been no public solicitation of Members. "A" will serve as the President of the Fund and will make all trading decisions for the Fund. He has considerabl e exper￾tise in t he trading of oil future s c ontract s. He is employe d as a trader of proprietary accounts, in bot h the cash and futures markets, for "U". You explain that the Fund was formed "to avail i t s Membe rs of the conside rable e xpe rtise" of "A" i n trad ing oil future s contracts. "A" is not subj e ct to a statutory disqua li- ~/ 17 C.F.R. §230.501(a) (1995).