CFTC Staff Letter 99-02: IB Registration Requirements for Commodity Futures Seminar Organizers

99-02
CFTC Letter No. 99-02
December 23, 1998
Division of Trading & Markets
Re: Section 4d(1) of the Act: Applicability of Introducing Broker Registration Requirements to Organizers of Commodity Futures Seminars and Conferences Dear :
This is in response to your letter dated November 7, 1997 to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission") in which you request an interpretation as to the disclosure or other requirements that may apply when an associated person ("AP") of an introducing broker ("IB") solicits customers at futures-related seminars and conferences that may be sponsored by or have as speakers parties that are not registered with the Commission. You submitted this request after auditors from the National Futures Association ("NFA") raised issues concerning the attendance by associated persons ("APs") of "X" at such seminars and conferences. Based upon your correspondence, we understand the pertinent facts to be as follows. "X" is a registered guaranteed IB. 1 After a recent audit of "X", NFA compliance staff provided "X" with a copy of CFTC Interpretative Letter No. 96-45,2 which expressed the Division's view that persons who sell "leads" to Commission registrants are required to register as APs of that registrant or as IBs. NFA staff raised the possibility that in paying sponsors for its APs to attend certain futures-related seminars, "X" may in effect be purchasing leads from unregistered parties and questioned whether attendance by "X's" APs (and the solicitation of customers by the APs) at such seminars required seminar sponsors to be registered as IBs or in some other capacity.3 However, you represent that as
part of "X's" marketing efforts, its APs attend publicly offered futures industry
conferences and seminars for the purpose of learning about current trading techniques and meeting other attendees who may be interested in "X's" brokerages services. Moreover, you believe that "X's" attendance at these seminars is clearly distinguishable from the activities described in CFTC Interpretative Letter No. 96-45, and "do not approach the level of involvement between the company in the business of selling lead lists and the registrants cited in the letter." In this regard, you argue that sponsors of and speakers at the seminars are not in the business of generating leads, nor are they compensated for referring potential customers to registrants. Instead, fees, when paid by "X", are paid for admittance to the conference or seminar in consideration for the educational value of such events or for the ability to meet with other attendees who may file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/99letters/tm99-02.htm (1 of 6) [5/6/2010 7:12:28 PM]