CFTC Staff Letter 99-19: Exemption from Rule 4.21 Disclosure Document Delivery for Registered CPO

99-19
CFTC Letter No. 99-19
February 11, 1999
Exemption
Division of Trading & Markets
Re: Rule 4.21 -- Request for Relief from Disclosure Document Delivery Requirement Dear :
This is in response to your letter dated December 18, 1997 to the Division of Trading and Markets ("Division") of the Commodity Futures Trading Commission ("Commission"), as supplemented by letter dated April 6, 1998 and telephone conversations with Division staff. By your letters, as supplemented, you request on behalf of ("R"), a registered commodity pool operator ("CPO"), that the Division exempt "R" from the requirement in Commission Rule 4.211 that "R" provide a Disclosure Document to the participants of: (1) "S"; (2) "T"; and (3) "U" (collectively, the "Funds"), each a commodity pool for which "R" serves as the general partner (in the case of "S") or as the managing member (in the case of "T" and "U") and the CPO thereof. Based upon the representations made in your letters, as supplemented, we understand the relevant facts with respect to the operation of the Funds to be as follows. As noted above, "R" is registered with the Commission as a CPO. "S" has been formed as a "master" fund for two commodity pool "feeder funds" for which "R" serves as the general partner and CPO. These two commodity pools are "V" and "W". "V" and "W" will be the only investors in "S". "T" is a limited liability company owned approximately 99 percent by "S" and approximately one percent by "R". "R" serves as the managing member and CPO of "T". "S" invests in offshore investment funds that are "passive foreign investment companies" ("PFICs") through "T" in order to permit "T", as a U.S. entity, to make a "qualified electing fund" election with respect to the PFIC.2 "T" and "R" will be the only investors in "T". "U", like "T", was formed as a master fund for two commodity pool feeder funds for which "R" will serve as the general partner and CPO thereof. These two feeder funds are "X" and "Y", which will be the only investors in "U". In support of its request for relief from Rule 4.21, "R" represents that it will include all relevant disclosures regarding "S" and "T" in the Disclosure Documents for "V" and "W".3 Similarly, "R" represents that it will include all relevant disclosures regarding "U" in the Disclosure Documents for "X" and "Y". file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/99letters/tm99-19.htm (1 of 3) [5/6/2010 7:12:42 PM]