CFTC Staff Letter 97-52: Limited Partnership Not Considered a Commodity Pool

97-52
CFTC Letter No. 97-52
June 24, 1997
Division of Trading & Markets
Re: Request that Limited Partnership Not be Considered a Commodity Pool Dear :
This is in response to your letter dated June 10, 1997, to the Division of Trading and Markets ( Division ) of the Commodity Futures Trading Commission ( Commission ). By your letter you request that: (1) the Partnership not be considered a commodity pool within the meaning and intent of Rule 4.10(d)(1);1 (2) the Partnership be treated as a qualified eligible participant ( QEP ) pursuant to Rule 4.7(a)(1)(ii)(B)(2)(viii); and (3) the Partnership be permitted to invest more than ten percent of its assets in a Rule 4.7(a) exempt pool (the Fund ). Based upon the representations made in your letter, we understand the pertinent facts to be as follows. The Partnership will be formed later this month. It will be a limited partnership formed solely to serve the investment purposes of the members of the family of A and it will engage in all aspects of capital investment and management, directly or through investments in other partnerships. The Partnership is not being formed for the specific purpose of participating in the Fund and it will make other substantial investments in addition to its participation in the Fund. The initial net capital of the Partnership will be in excess of $5 million. The general partner will be the General Partner . The two members of the General Partner will be A , 2 the managing member, and B , his wife, who also will be the initial limited partners of the Partnership. They intend subsequently to sell a portion of their limited partnership interests in the Partnership to two irrevocable grantor trusts. One trust will be established by A , and its beneficiaries will be B and the living descendants of A and B . The other trust will be established by B , and its beneficiaries will be A and the living descendants of A and B . With respect to your request for relief from CPO registration, based on your representations that the limited partners in the Partnership initially will be A and B and subsequently will be trusts established for the benefit of A or B and their living descendants, and consistent with our prior practice in this area,3 the Division confirms that the Partnership is not a commodity pool within the meaning and intent of Rule 4.10(d)(1) and, consequently, that the General Partner is not a CPO thereof. In addition, the Division confirms that the Partnership qualifies as a QEP pursuant to Rule 4.7(a)(1)(ii)(B)(2)(viii)4 based upon your representations that the Partnership will have total assets in excess of $5 million, will not be formed for the specific purpose of participating in the Fund, file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-52.htm (1 of 3) [5/6/2010 7:35:02 PM]