CFTC Staff Letter 97-78: No-Action for Family Limited Partnership Regarding Commodity Pool and QEP Status

97-78
CFTC Letter No. 97-78
September 24, 1997
Division of Trading & Markets
Re: Rule 4.10(d)(1) -- Request that a Limited Partnership Comprised of Immediate Family Members Not be Considered a Commodity Pool Dear :
This is in response to your letter dated August 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. By this correspond-ence, you request on behalf of (the Partnership ), confirmation that: (1) the Partnership is not a commodity pool within the meaning and intent of Rule 4.10(d)(1)1 ; (2) the Partnership is a qualified eligible participant ("QEP") under Rule 4.7(a)(1)(ii)(B)(2)(viii); and (3) the Partnership may invest more than ten percent of the fair market value of its assets in Rule
4.7 exempt pools (the "Funds").
Based upon the representations made in your correspondence, we understand the pertinent facts to be as follows. The Partner-ship is a New Jersey limited partnership and has been formed solely to serve the investment purposes of the members of the families of A , B and C . The Partnership engages in all aspects of capital investment and management, either directly or through investments in other partnerships. The Partnership was not formed for the specific purpose of participating in the Funds and it will make other substantial investments in addition to its participation in the Funds. As of July 1, 1997, the net capital of the Partnership was in excess of $35 million. The managing general partners of the Partnership are A and B , her sister-in-law, both of whom are QEPs. C , the former husband of A , acts as a non-managing general partner (together with the managing partners, the "General Partners"). The limited partners consist of: the General Partners; B's three children and two trusts of which they are the beneficiaries; a trust in the name of the late D , who was A's brother and B's husband, of which B is the current beneficiary; B's sister, E ; B's grandson, F ; a trust for the benefit of A ; two trusts of which A's two sons are the beneficiaries; and C's present spouse. Either A or B acts as trustee for each of the trusts that are limited partners, with full investment discretion for the respective trusts of which they serve as trustees. In addition, the Partnership may wish to offer limited partnership interests to additional immediate family members of the General Partners or trusts for the benefit of such family members in the future. file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-78.htm (1 of 3) [5/6/2010 7:36:21 PM]