CFTC Staff Letter 97-65: General Partner of Cayman Islands Limited Partnership Not Required to Register as CPO

97-65
CFTC Letter No. 97-65
July 31, 1997
Division of Trading & Markets
Re: Request for Relief from CPO Registration Requirement of Section 4m(1)of the Act Dear :
This is in response to your letter dated July 3, 1997 to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by your letters dated July 22 and July 23, 1997, and by telephone conversations with Division staff. By your correspondence, you request that the Division not recommend that the Commission take any enforcement action against X , a Cayman Islands company, for failure to comply with the commodity pool operator ("CPO") registration requirement of Section 4m(1) of the Commodity Exchange Act ("Act")1 in connection with serving as the sole general partner of the "Fund", a Cayman Islands limited partnership on whose behalf Y registered CPO, has claimed relief pursuant to Rule 4.7(a).2 Based upon the representations made in your correspondence, we understand the relevant facts to be as follows. The Fund's sole investment will be in the shares of U , Rule 4.7(a) exempt pool which invests in a variety of securities and other financial instruments issued by United States ("U.S.") and foreign issuers, as well as commodity interests.3 The current minimum investment for the Fund is $1,000,000. You request that Y be deemed to be the CPO of the Fund. Since X will be serving as the sole general partner of the Fund, it would, absent relief, be required to be registered as a CPO in connection with its operation of the Fund.4 You propose that Y be considered to be the Fund's CPO, notwithstanding that X is the sole general partner of the Fund. In support of this request, you represent that (1) Y is registered as a CPO; (2) X and Y are affiliated companies in that X is a wholly owned subsidiary of, and is controlled by, Y ; 5 (3) X was established pursuant to a requirement under Cayman Islands law that the general partner of a partnership formed under Cayman Islands law must itself be formed under Cayman Islands law;6 (4) X will not engage in any activity that could subject it to regulation as a CPO other than serving as the general partner of the Fund; and (5) neither X nor any principal thereof is subject to a statutory disqualification under Section 8a(2) or 8a(3) of the Act.7 You have enclosed with your letter a signed acknowledgment, dated July 3, 1997, whereby Y and X agree to be jointly and severally liable with each other for any violations of the Act and Commission regulations file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-65.htm (1 of 3) [5/6/2010 7:36:38 PM]