CFTC Staff Letter 97-94: No-Action Relief from CPO and CTA Registration for ERISA Group Trust Sponsor and Trustee

97-94
CFTC Letter No. 97-94
November 21, 1997
Division of Trading & Markets
Re: Section 4m(1) -- Request for relief from commodity pool operator ( CPO ) and commodity trading advisor ( CTA ) registration requirements for X as sponsor of an ERISA group trust and from CPO registration requirements for Y as trustee and custodian of such group trust Dear :
This is in response to your letter dated July 18, 1997, to the Division of Trading and Markets (the Division ) of the Commodity Futures Trading Commission (the Commission ), as supplemented by your letter dated August 8, 1997 and by telephone conversations with Division staff. By this correspondence, you request that the Division not recommend that the Commission take any enforcement action against X or Y in connection with the operation of the Group Trust if: (1) X does not register under Section 4m(1) of the Commodity Exchange Act (the Act ) 1 as a CPO and CTA; and (2) Y does not register as a CPO.2 Based upon your representations, we understand the pertinent facts to be as follows. X , the sponsor of the Group Trust, is a S corporation and a state-regulated insurance company.3 It is a registered investment adviser under the Investment Advisers Act of 1940 (the IAA ).4 The Group Trust was organized pursuant to an Agreement of Trust dated May 20, 1997 (the Trust Agreement ) by and between X as fund manager and Y as trustee. The Group Trust was formed to provide its participating trusts with a guaranteed investment contract ( GIC ) having a fixed annual rate of return and fixed maturity. X guarantees principal, interest and book value benefit payments to the Group Trust s participating trusts. Participation in the Group Trust is limited to trusts, each of which (a Participating Trust ) is part of a qualified employee pension or profit-sharing plan or governmental plan (collectively, Plans ) and each of which is (1) exempt under Section 501(a) of the Internal Revenue Code ( IRC ) from federal income taxation by reason of being qualified under Section 401(a) of the IRC or (2) is a governmental plan described in Sections 401(a)(24) and 818(a)(6) of the IRC.5 file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/97letters/tm97-94.htm (1 of 6) [5/6/2010 7:36:28 PM]