CFTC Staff Letter 97-83: No-Action Relief from CPO Registration for Fund and Board of Managers

97-83
CFTC Letter No. 97-83
September 5, 1997
Division of Trading & Markets
Re: Section 4m(1) -- Request for no-action relief from commodity pool operator ( CPO ) registration requirements for U and the members of the Board of Managers of the Fund in connection with the operation of the Fund Dear :
This is in response to your letter dated July 10, 1997, to the Division of Trading and Markets (the Division ) of the Commodity Futures Trading Commission (the Commission ), as supplemented by the July 18, 1997 telefacsimile transmission of H of your office and by telephone conversations with Division staff. By this correspondence, you request no-action relief from the requirement of
Section 4m(1) of the Commodity Exchange Act (the Act )
1 to register as a commodity pool operator ( CPO ) for U which is a registered commodity trading advisor ( CTA ) and registered investment adviser, and for each of the members of the Board of Managers of (the Fund ) in connection with the operation of the Fund.2 Because the Fund will trade commodity interests, absent relief one or more of the members of the Board of Managers would be required to register as a CPO, and because extensive operational and management authority has been delegated by the Board of Managers to U as described below, U would also be required to register as a CPO. Based upon the representations contained in the correspondence, we understand the pertinent facts to be as follows. The Fund is a Delaware limited liability company organized in the last quarter of 1996, and it was closed to new investors June 6, 1997. Its purpose is to provide diversification and professional investment management to persons who have substantial holdings of equity securities which have accrued relatively large unrealized capital appreciation or which are subject to transfer or disposition restrictions under the Securities Act of 1933 (the Securities Act ).3 Participants subscribe by contributing securities acceptable to U with an aggregate value of at least $1 million, in exchange for units of participation in the Fund.4 The Fund has approximately $70 million in assets. The units of interest in the Fund were offered and sold in a private placement to accredited investors as defined in Regulation D5 under the Securities Act. The Fund entered into agreements with V and W pursuant to which V and W (both of which are registered as broker-dealers with the Securities and Exchange Commission ( SEC )) would act as co-placement agents for the Fund. file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-83.htm (1 of 6) [5/6/2010 7:36:22 PM]