CFTC Staff Letter 97-73: No-Action for Directors of Fund X and Exemption from Record Location Rule

97-73
CFTC Letter No. 97-73
August 20, 1997
Division of Trading & Markets
Re: Section 4m(1)-- Request for Relief from CPO Registration Rule 4.23(a) -- Request for Relief Concerning Location of Original Books and Records Dear :
This is in response to your letter dated May 1, 1997, as supplemented by letters dated July 25, August 5 and August 14, 1997 and telephone conversations with Division staff, in which you request, in connection with the operation of the "Fund", that the Division of Trading and Markets ("Division") not recommend any enforcement action to the Commission for failure to comply with
Section 4m(1) of the Commodity Exchange Act, as amended (the "Act")1
against any persons serving on the Fund's board of directors ("Directors") if under the circumstances set forth below none of the Directors registers as a commodity pool operator ("CPO"). You also have requested relief on behalf of X from the requirement in Rule 4.23(a) concerning the location of the original books and records of the Fund. Based upon the representations made in your correspondence, we understand the relevant facts to be as follows. The Fund will invest primarily in fixed income and equity securities but also will invest and trade in a variety of other financial investments, including commodity futures contracts and options thereon. The Fund may invest in commodity interests both directly and indirectly through other pooled investment vehicles. X , a registered CPO, acts as the Fund's investment manager and is responsible for making all day-to-day decisions regarding the trading and investment of the Fund's assets, including the trading of commodity interests. X played an integral
part in establishing the Fund, having performed such functions as hiring lawyers, accountants and
other service providers to represent the Fund and participating in the preparation of the Fund's offering memorandum. X will operate the Fund pursuant to Commission Rule 4.7(a)2 and, accordingly, each investor in the Fund is required to be a qualified eligible participant ("QEP") as defined in the rule. The minimum investment required of each investor in the Fund is $1 million, although X will have the discretion to accept investments of less than this amount. The Fund's Board of Directors currently is comprised of five individuals, none of whom is a United States person.3 None of the Directors is affiliated with X or with any other Commission file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-73.htm (1 of 4) [5/6/2010 7:36:36 PM]