CFTC Staff Letter 98-67: Exemption for CPO to Treat Certain Employees as Qualified Eligible Participants

98-67
CFTC Letter No. 98-67
September 15, 1998
Division of Trading & Markets
Re: Rule 4.7(a) -- Request for Exemptive Relief to Treat Certain Employees of the CPO as QEPs Dear :
This is in response to your letter dated January 12, 1998, to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by your facsimile dated March 23, 1998 and telephone conversations with Division staff. By your correspondence, you request on behalf of "P", a registered commodity pool operator ("CPO") and commodity trading advisor ("CTA"), that the Division permit "P", in connection with its operation of "Q" and "R", as well as any additional Rule 4.7 exempt pools operated or advised by "P" (collectively the "Funds"), to treat two employees of "P" 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. By letter dated April 14, 1997, the Division permitted "P", in connection with "P's" operation of the "S", a Rule 4.7(a) exempt pool, to treat "A" and "B" (the "Non￾QEP Employees"), employees of "P" who do not satisfy the QEP criteria, as QEPs. "P" now requests relief so that it may allow the Non-QEP Employees to participate in the Funds. "P" serves as the CPO of "Q" and "R", which were established in October 1993 and September 1993, respectively. Pursuant to Notices of Claim for Exemption under Rule 4.7 (a), interests may be sold only to QEPs.2 "P" now seeks an exemption to permit the Non￾QEP Employees to participate in the Funds. In support of your request, you have provided the following information:
(1) "A" is a Vice President, the Chief Financial Officer and a registered associated person of "P". "A" oversees "P's" operations, finances, administration and compliance. He is a member of "P's" investment committee and in this role is responsible for selecting investment advisers to manage the assets of "S", "Q", "R" and any other Fund. "A" holds a Bachelor's degree in accounting from "T" and has substantial financial and file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/98letters/tm98-67.htm (1 of 3) [5/6/2010 7:32:22 PM]