CFTC Staff Letter 98-65: Exemption to Treat Certain Employees as Qualified Eligible Participants

98-65
CFTC Letter No. 98-65
August 24, 1998
Division of Trading & Markets
Re: Rule 4.7(a); Request to Treat Certain Investors as Qualified Eligible Participants Dear :
This is in response to your letter dated March 11, 1998 to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by your facsimile transmissions dated March 30, 1998 and April 6, 1998 and telephone conversations with Division staff. By your correspondence, you request exemptive relief on behalf of "H" and "I" (collectively, the "General Partners"), both registered commodity pool operators ("CPOs"), and the general partner and CPO, respectively, of "J" and "K" (the "LPs"), so that they may treat two persons who are their employees as if they satisfy the qualified eligible participant ("QEP") criteria of Rule 4.7(a).1 Based upon the representations made in your correspondence, we understand the facts to be as follows. Each LP is operated pursuant to Rule 4.7(a).2 The General Partners propose to admit two persons employed by each of them who are not QEPs (the "Proposed Non-QEP Participants") in one or more of the LPs or in other funds operated by the General Partners (the LPs and such other funds are collectively referred to hereafter as "Funds") or other entities similarly formed to operate other funds by the principals of the General Partners. Specifically, the Proposed Non-QEP Participants are:
(1) "A", a registered associated person ("AP") , principal and Chief Executive officer ("CEO") of "H", "I", and "L" (each a "Registrant") since the formation of each firm in October 1997, February 1998, and July 1997, respectively. 3 As CEO of each Registrant, he oversees all business aspects of the firms, including finance, staffing, compensation, benefits, legal, compliance and tax issues. He is also the head securities trader for each firm. From 1995 through 1997, "A" served as Vice President at "M" in London where he engaged in sales of European equities, block trading of equities, and supervised initial public offerings and privatizations. From 1994 to 1995, he was a Director at "O" in London where he was head of "N" managing a team of forty-five professionals. From 1992 to 1994, he worked at "P" in London as a Vice President engaged in sales of European and emerging market equities, initial public offerings, privatizations and the formation of Eastern European stockmarkets. "A" graduated with honors from "U" in England in 1988. He is an accredited investor under Regulation D of the Securities Act of 1933 ("Regulation D"). file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/98letters/tm98-65.htm (1 of 3) [5/6/2010 7:32:21 PM]