CFTC Staff Letter 97-87: Exemption from Disclosure and Reporting Rules for a Registered CPO's Fund

97-87
CFTC Letter No. 97-87
October 29, 1997
Division of Trading & Markets
Re: Request for Relief from Rules 4.21, 4.22(a) and 4.22(b), 4.24, 4.25, and 4.26 Dear :
This is in response to your letter dated September 3, 1997 to the Division of Trading & Markets of the Commodity Futures Trading Commission ( Commission ) as supplemented by telephone conversations with Division staff. By your correspondence, you seek relief from the requirements of Rules 4.21, 4.22(a) and (b), 4.24, and 4.261 on behalf of R , a registered commodity pool operator ( CPO ) and commodity trading advisor ( CTA ), with regard to R s operation of the Fund. 2 Based upon the representations made in your correspondence, we understand the relevant facts to be as follows. The Fund was organized as an investment partnership for the purpose of permitting certain principals and/or employees of R and/or its affiliate, V, 3 to invest in W, a fund which invests in commodity interests and U.S. equity and debt securities.4 Participation in the Fund is strictly voluntary, and R will not market the Fund to the general public. R proposes to admit as participants in the Fund ten persons (the Proposed Participants ), three of whom are principals of R and/or V. The remaining seven Proposed Participants are employees of R and are exclusively engaged in the management of the Fund s assets allocated to W. With one exception ( B, discussed below), all of the Proposed Participants have duties with respect to the day-to-day trading and/or operation of W. All but one of the Proposed Participants ( A, discussed below) also have five or more years of experience in various capacities within the financial services sector. Specifically, the Proposed Participants are:
(1) B, who is a QEP and the controlling principal of both R and V.
(2) C, who is a principal of R and is the principal trader for W. Before joining R, he was the vice-president of research for a large New York brokerage firm where he was employed between 1982 and 1993. C is an accredited investor who intends to make an initial investment of $1 million. (3) D, who is a principal of R and a senior trader for W. D has been file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-87.htm (1 of 4) [5/6/2010 7:36:25 PM]