CFTC Staff Letter 97-23: No-Action Relief for CPO Treating Non-QEP Investor as Qualified Eligible Participant

97-23
CFTC Letter No. 97-23
February 27, 1997
Division of Trading & Markets
Re: Request to Treat Investor as a Qualified Eligible Participant under Rule 4.7 Dear :
This is in response to your letter dated January 15, 1997 to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by telephone conversations with Division staff. By your correspondence, you request on behalf of (the General Partner ), a registered commodity pool operator ("CPO"), relief from Rule 4.7(a)1 in connection with its operation of "the Partnership)2 such that it may treat A as a qualified eligible participant ("QEP") as defined in the rule. Based upon the representations made in your correspondence, we understand the relevant facts to be as follows. The General Partner wishes to permit A , who is not a QEP, to invest in the Partnership. In support of your request, you represent that A : (1) has been a Managing Director of X s operations since October 1995; (2) previously was employed as a trading strategist by Y and, in that capacity, was responsible for developing new trading strategies for a $100 million proprietary fund; (3) received an M.B.A. in Finance and Entrepreneurial Management from Z in May 1993; (4) is fully familiar with the investment activities of the Partnership and has access to its books and records; and (5) consents to treatment as a QEP. Based upon the foregoing, it appears that granting the requested relief would not be contrary to the public interest and the purposes of Rule 4.7(a). Accordingly, the Division will not recommend that the Commission commence enforcement action against the General Partner for failure to comply with Rule 4.7(a) solely based on its treatment of A as a QEP. This relief is applicable to the General Partner solely in connection with its operation of the Partnership. This letter is based upon the representations made in your correspondence. Any different, changed or omitted facts or circumstances might require us to reach a different conclusion. In this regard, we request that you notify us immediately in the event that the operations or activities of the Partnership, including the composition of its investors, file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-23.htm (1 of 2) [5/6/2010 7:35:06 PM]