CFTC Staff Letter 97-62: Exemption from Rule 4.21 Disclosure and Rule 4.23(a) Record Location Requirements

97-62
CFTC Letter No. 97-62
July 15, 1997
Division of Trading & Markets
Re: Rule 4.21 -- Request for Relief from Disclosure Document Delivery Requirement Where General Partner of Pool is General Partner of the Pool s Limited Partners Rule 4.23(a) -- Request for Relief Concerning Location of Original Books and Records Dear :
This is in response to your letter dated May 12, 1997, to the Division of Trading and Markets ( Division ) of the Commodity Futures Trading Commission ( Commission ), as supplemented by telephone conversations with Division staff, in which you request on behalf of U , a registered commodity pool operator ( CPO ), that the Division exempt U from the requirement in Commission Rule 4.211 that U provide a Disclosure Document to the participants of V and W , commodity pools for which U serves as the general partner and CPO thereof. Additionally, you request that the Division exempt U from the requirement in Rule 4.23(a) concerning the location of the original books and records of V . Based upon the representations made in your letter, as supplemented, we understand the relevant facts to be as follows. As noted above, U is registered with the Commission as a CPO. In response to recently adopted amendments to the Investment Company Act of 1940 (the ICA ), which permit an investment fund investing primarily in securities to have more than 100 investors under certain circumstances, certain funds for which U acts as the general partner and CPO are undergoing a reorganization. In this regard, V has been formed as a master fund for two commodity pool "feeder funds" for which U serves as the general partner and CPO. These two commodity pools are the X and Y . X and Y will be the only investors in V . 2 Y will invest all of its assets in V . X will invest a substantial portion of its assets in V , but also will engage in other investment activities either directly or through investment in other funds, including W . 3 W was formed in 1993 to invest primarily in equity securities. Pursuant to the reorganization, existing W investors will be offered the opportunity to exchange their interests in W for interests in X . 4 Those investors who choose not to avail themselves of this opportunity will remain W investors, but will not be entitled to make additional investments in W . Additionally, W will not accept any new investors. After completion of the reorganization, X will be the largest investor in W and will be the only W investor entitled to make additional investments. In further support of your request for relief from Rule 4.21 on behalf of U , you represent that U will include all relevant disclosures regarding V in the Disclosure Documents for X and Y and will include all relevant disclosures regarding W in the Disclosure Document for X . 5 As you are aware, Commission Rule 4.21 generally requires that, prior to soliciting, accepting or receiving funds file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-62.htm (1 of 3) [5/6/2010 7:36:33 PM]