CFTC Staff Letter 99-45: No-Action Position on CPO Registration for Private Investment Fund Operator

99-45
CFTC Letter No. 99-45
September 15, 1999
No-Action
Division of Trading & Markets
Re: Section 4m(1) of the Act; -- Request for No-Action Position from CPO Registration. Dear :
This is in response to your letter dated October 26, 1998 to the Division of Trading and Markets ( Division ) of the Commodity Futures Trading Commission ( Commission ), as supplemented by your letters dated December 23, 1998, February 16, 1999 and July 30, 1999 and telephone conversations with Division staff, whereby you request our interpretation that X will not become a commodity pool within the meaning and intent of Rule 4.10(d)(1)1 if it trades commodity interests and that V will not become a commodity pool operator ( CPO ) within the meaning and intent of Section 1a(4) of the Commodity Exchange Act ( Act ) 2 as a result of operating U . The staff has elected to treat your request as a request for a no-action position from the CPO registration requirements of Section 4m (1) of the Act.3 For the reasons set forth below, we will grant the request. Facts Based upon the representations made in your correspondence, we understand the facts to be as follows. U is a limited liability company which operates as a private investment fund. As of June 30, 1999, it had a net asset value of approximately $87 million. The members of U are V , A , his wife B and C , a long-time colleague and employee of A . V is the managing member of U . The partners of V are A and B , each holding a ten percent interest, and an irrevocable trust for the benefit of the three children, holding an eighty percent interest. A is the general partner of V . C is a special limited partner of V solely for the purpose of receiving a return on a particular investment that V has made with his assistance. V receives no compensation for acting as the managing member of U , and U is the only fund operated by V . Interests in U will not be assigned, will only be transferred to a member s spouse, lineal descendant or the spouse of a lineal descendant, or to a trust for the benefit of such a spouse, lineal descendant or spouse of a lineal descendant and will not be transferred for consideration (e.g., interests will be transferred by gift). file:///S|/Website%20Management/LegacyDataCopyasof2010-04-21/tm/letters/99letters/tm99-45.htm (1 of 4) [5/6/2010 7:14:26 PM]