CFTC Staff Letter 97-82: No-Action Relief from CPO and CTA Registration for Trust Investment Manager and Trustee

97-82
CFTC Letter No. 97-82
September 23, 1997
Division of Trading & Markets
Re: Section 4m(1) of the Commodity Exchange Act -- Request for Relief from CPO and CTA Registration for Trustee and Investment Manager of Foreign Trust Dear :
This is in response to your letter dated April 18, 1997, to the Division of Trading and Markets ( Division ) of the Commodity Futures Trading Commission ( Commission ), as supplemented by letters dated July 18 and September 5, 1997 and telephone conversations with Division staff, in which you request on behalf of your client, R , that the Division not recommend enforcement action to the Commission if R fails to register as a commodity pool operator ( CPO ) or commodity trading advisor ( CTA ) in connection with R s activities related to the operation of the Trust . You also request that the Division not recommend enforcement action against the Trustee if the Trustee fails to register as a CPO in connection with its activities related to the Trust. 1 Based upon the representations contained in your correspondence, we understand the relevant facts to be as follows. The Trust is a unit trust established under the laws of the Cayman Islands and is exempt from registration as an investment company under Section 3(c)(1) of the Investment Company Act of 1940. R was responsible for establishing the Trust, including the payment of legal fees related to the Trust and obtaining the Trust s administrator. Units in the Trust were offered initially at an offering price of $100,000 per unit on October, 1 1993, and thereafter on each weekly valuation date at their net asset value until November 30, 1993. The Trustee serves as Trustee of the Trust and is responsible for the day-to-day administration of the Trust, retention of the Trust s books and records, preparation and distribution of reports to unitholders and responding to unitholders inquiries relating to the Trust. The Trustee also acts as the Trust s transfer agent. The Trustee has entered into an agreement with R naming R as the Trust s investment manager. R is a United States subsidiary of S which, together with its consolidated subsidiaries ( T ) is a bank engaged principally in commercial banking operations in other countries.2 As a branch of a foreign bank, R is exempt from registration as an investment adviser with the Securities and Exchange Commission ( SEC ) pursuant to Section 202(a)(ii)(A) of the Investment Advisers Act of 1940. R s activities in the United States are subject to regulation by the Board of Governors of the Federal Reserve System pursuant to the International Bank Holding Company Act. As the Trust s investment manager, R is responsible for, among other things, making investment decisions on behalf of the Trust, placing purchases and sale orders for investments on behalf of the Trust, monitoring the credit quality of the instruments held by the Trust and selecting the dealers that will execute the purchases and sales of portfolio securities for the Trust. R has not provided and will not provide commodity interest trading advice to any persons other than the Trust and is not affiliated with any Commission registrant. The Trust is authorized to invest in commodity interests on
behalf of its unitholders. You represent that to date the Trust has not invested in commodity interests; however, based upon the recommendation of R as the Trust s file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-82.htm (1 of 3) [5/6/2010 7:36:23 PM]