CFTC Staff Letter 97-53: No-Action Relief from CPO and CTA Registration for Insurance and Trust Companies

97-53
CFTC Letter No. 97-53
June 24, 1997
Division of Trading & Markets
Re: Section 4m(1) of the Act -- Request for Relief from CPO and CTA Registration for Two State-Regulated Insurance Companies and a State-Regulated Trust Company. Rule 4.7(a) -- Request To Treat Insurance Company Separate Account and Limited Liability Trading Vehicle Sub-Account as Rule 4.7(a) Exempt Pools, and for Relief from Ten Percent Restriction of Rule 4.7(a)(1)(ii)(B)(2)(xi). Dear :
This is in response to your letter dated April 23, 1997, to the Division of Trading and Markets (the Division ) of the Commodity Futures Trading Commission (the Commission ), as supplemented by facsimile transmissions dated May 8 and May 27, 1997 from A of your firm and by telephone conversations with Division staff. By your correspondence, you request certain relief on behalf of: (1) R , a registered commodity pool operator ( CPO ); (2) S , a limited purpose trust company; (3) T , a chartered bank and trust company; and (4) Y and Z , each a state-regulated insurance company (collectively U ). Your request pertains to an estate planning device designed jointly by U , S and R involving the offering of variable life insurance policies (the Contracts ) 1 to certain trusts (the Trusts ) established by persons who are qualified eligible participants ( QEPs ) and qualified eligible clients ( QECs ) as defined in Commission Rule 4.7. 2 Specifically, you request that the Division take a no-action position with respect to S , T and U for failure to register as commodity trading advisors ( CTAs ) or as CPOs as required by Section 4m(1) of the Commodity Exchange Act (the Act ).3 You further request that R be allowed to claim relief pursuant to Rule 4.7(a) from certain requirements of Part 4 of the Commission s rules with respect to: (1) the U separate account (the Separate Account ) into which Contract premiums received from the Trusts will initially be placed; and (2) a sub-account (the LP Subaccount ) that may invest all or part of the funds placed in the Separate Account in limited liability trading vehicles, including limited partnerships and limited liability companies, some of which will be commodity pools.4 Finally, you request relief from Rule 4.7(a)(1)(ii)(B)(2)(xi) (the Ten Percent Restriction ) with respect to R and the CPO of any Rule 4.7(a) exempt pool in which the LP Subaccount invests, notwithstanding the presence of non-QEPs in the LP Subaccount. file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-53.htm (1 of 8) [5/6/2010 7:36:20 PM]