CFTC Staff Letter 98-80: No-Action Confirmation for Offshore Fund Director and CTA Disclosure Exemption

98-80
CFTC Letter No. 98-80
November 25, 1998
Division of Trading & Markets
Re: Request for Confirmation that Commodity Pool Operator Registration under
Section 4m(1) is not required. Request for Exemption from the Disclosure
Document Delivery Requirement of Rule 4.31
Dear :
This is in response to your letter dated February 5, 1998 to the Division of Trading and Markets (the "Division") of the Commodity Futures Trading Commission (the "Commission"), as supplemented by your facsimile transmissions dated February 24, 1998 and March 5, 1998 and telephone conversations with Division staff. By your correspondence, you request confirmation that: (1) "A", a director of (the "Fund"), is not required to register as a commodity pool operator under Section 4m(1) of the Commodity Exchange Act (the "Act");1 and (2) (the "Company"), a registered commodity trading advisor ("CTA"), be exempt from the requirement of Rule 4.312 to deliver a Disclosure Document to the Fund. Based upon the representations made in your correspondence, we understand the facts to be as follows. The Fund is organized under the laws of the Bahamas, and does not have any shareholders or officers who are "United States persons" as that term is defined in Rule 4.7(a)(1)(ii)(C). The Fund has three directors (the "Directors"): "A", who is a United States ("U.S.") citizen residing in Greece;3 "B", who is "A's" wife and a citizen and resident of Greece; and "C", a citizen and resident of Germany. The Fund does not contain any capital directly or indirectly contributed from U.S. sources. Neither any director, the Fund nor any person affiliated therewith have undertaken or will undertake any marketing activity for the purpose, or that could reasonably be expected to have the effect, of soliciting participation from U.S. persons. The Fund's sole office is located outside of the U.S. and the Fund will not conduct any marketing activities within the U.S. "A" is registered as an associated person ("AP") of the Company and listed as its sole principal. "A" will not be involved in any solicitation activities on behalf of the Fund.4 He will maintain the books and records of the Fund equivalent to those required of registered CPOs under Rule 4.23(a)(1)-(a)(9) and (b)(1)-(b)(3) at the Company's main business office in Greece and these records will be made available in the U.S. for inspection by a duly authorized representative of the Commission or the National Futures Association ("NFA") within seventy-two hours of receipt of a request for the production of these file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/98letters/tm98-80.htm (1 of 4) [5/6/2010 7:32:39 PM]