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Exemptive Letters

Date
Exemptive Letters
11/30/1999
00-01 PDF Image; Rule 4.7(b) -- Exemptive Relief for CTA; Exemption
The Division of Trading and Markets provided exemptive relief to a registered CTA and investment adviser permitting it to treat a trust (Trust) established as part of a bankruptcy reorganization as a qualified eligible client. The CTA was seeking to trade commodity interest primarily in order to manage the interest rate and foreign currency exposure arising from the securities investments of the Trust. Because of the unique characteristics of the Trust, it did not fit squarely within the definition of QEC set forth in either Rule 4.7(b)(1)(ii)(B)(2)(viii) or 4.7(b)(1)(ii)(B)(2)(xi).
11/30/1999
00-02 PDF Image; Rule 4.21 and 4.22(d); Exemption
The Division of Trading and Markets exempted a registered CPO from the requirement of Rule 4.21 that the CPO provide a Disclosure Document to the participants of a fund operated by the CPO and from the requirement in Rule 4.22(d) that the CPO distribute to the participants in the fund and file with the Commission a certified annual report for the fund. In lieu of preparing a separate Disclosure Document and an annual report for the fund, the CPO will provide the participants of the fund with the Disclosure Document and provide the participants in the fund -- and file with the Commission -- a certified annual report prepared in connection with another pool operated by the CPO in which the fund had invested substantially all of its assets.
11/30/1999
00-03 PDF Image; Rule 4.7(a); Exemption
The Division of Trading and Market permitted a registered CPO to continue to treat a pool established for the employees of the manager of a fund as if it satisfies the QEP criteria of Rule 4.7(a) in connection with the investment of the pool in the fund, notwithstanding the addition of another non-QEP employee of the pool.
12/23/1999
00-04 PDF Image; Rule 4.7; Exemption
The Division of Trading and Markets extended the relief previously provided by CFTC Letter No. 99-30, to permit a CPO to additionally claim relief under Rule 4.7 with respect to four other pools it operated based upon, among others, representations that: (1) at least 94% of the capital of each other pool was contributed by QEPs; (2) the non-QEPs would not participate in investments by the other pools in commodity interests, would not share in any profits or losses from the other pools' commodity interest trading, and would not have any other pools' assets allocable to them subject to claim by the other pools' FCM; and (3) the CPO and the other pools would follow all of the procedures and requirements set forth in CFTC Letter No. 99-30.
12/30/1999
00-05 PDF Image; Rule 4.7; Exemption
The Division of Trading and Markets permitted a CPO to treat two persons as QEPs, where: (1) the first person was an accredited investor pursuant to Rules 501(a)(5) and 501(a)(6) under the Securities Act of 1933, who had worked as an analyst/trader in the securities industry for over five years; and (2) the second person was a executive officer of the Rule 4.7 pool and a knowledgeable employee under the Investment Company Act of 1940, who had worked in the financial services industry for over seven years.
12/22/1999
00-06 PDF Image; Rule 4.7(a) - Exemptive Relief for CPO; Exemption
The Division of Trading and Markets granted an exemption to permit the CPO of a Rule 4.7 Fund to treat a key employee as a QEP. The employee, the CPO's Director of Information and Technology since November 1997, researches historical price data for all commodities traded by the Fund, has built computer models based on its research, and along with the CPO's sole principal, developed the technical trading program that provides the overall portfolio strategy for the Fund. The Division also denied an exemption to the Company with respect to another employee who: (1) serves as a trader in a discrete market in which the Fund is trading; (2) has no discretion to place trades; and (3) is not an accredited investor.
12/22/1999
00-09 PDF Image; Rule 4.7(a) and 4.7(b) - Exemptive Relief for CPO and CTA; Exemption
The Division of Trading and Markets granted an exemption to a CPO and CTA, permitting it to treat unnamed employees of the CPO and its affiliates who meet certain specified criteria as QEPs for the purpose of investing in a Rule 4.7 Fund and any Future Funds (Future Funds) operated by the CPO.
08/11/1999
00-31 PDF Image; Rules 4.21, 4.22, and 4.23(a)(10) and (a)(11); Exemption
The Division of Trading and Markets permitted a registered CPO to continue to claim relief from Rules 4.21, 4.22, and 4.23(a)(10) and (a)(11) in connection with the CPO's operation of a fund, notwithstanding the investment in the fund of a non-QEP principal of the CPO and two non-QEP charitable trust established by two other principals of the CPO. The non-QEP investors were, or were created and managed by, principals of the CPO who had been employed by the CPO for at least the past four years and who should have access to the information otherwise required by Rules 4.21, 4.22, and 4.23(a)(10) and (a)(11).
03/17/1999
99-12 PDF Image; 4.22(c) & (d); Exemption
The CPO of a small pool which started in late 1998 requested exemption from the requirement of rule 4.22(d) that the pool's 1998 Annual Report be audited. The participants supported the request. The exemption was granted upon condition that (1) an unaudited 1998 annual report be provided to the participants and (2) the audited 1999 report will include 1998 data.
03/26/1999
99-15 PDF Image; 4.22(c) & (d); Exemption
The CPO of a small pool which did not engage in any commodity interest trading during the pool's fiscal year ending December 31, 1998, requested exemption from the requirement of Rule 4.22 (d) that the pool's 1998 Annual Report be audited. The exemption was granted upon condition that: (1) an unaudited 1998 annual report be provided to the participants and (2) the audited 1999 report will include 1998 data.
04/05/1999
99-16 PDF Image; 4.22 (c) & (d); Exemption
The CPO of a pool, which commenced operations on December 29, 1998, requested exemption from the requirement of Rule 4.22(d) that the pool's 1998 Annual Report be audited. The participants agreed in the Limited Liability Company Agreement that statements would be audited starting in 1999. Due to the extremely short period during 1998 that the fund was in operation, the exemption was granted upon condition that the audited 1999 report will include 1998 data.
03/23/1999
99-18 PDF Image; Rule 155.3(c)(3); Exemption
The Commission denied exemptive relief to a registered FCM from the order ticket delivery requirements of Rule 155.3(c)(3), which provides that an FCM handling the account of an AP of another FCM must send to the other FCM order tickets relating to the AP's account. Although the requester represented that the AP wished to keep his trades confidential from fellow employees, and that it would not be economically feasible for the FCM to execute the AP's trades lacking an exemption from the order ticket delivery requirement, the Commission determined that the requester did not articulate an adequate justification for an exemption from Rule 155.3(c)(3) in light of the important customer protection issues at stake.
02/11/1999
99-19 PDF Image; Rule 4.21; Exemption
The Division of Trading and Markets granted an exemption from the Disclosure Document delivery requirement of Rule 4.21 to "X," a registered CPO of two commodity pool "master" funds where participants in the funds were commodity pool "feeder" funds of which "X" also served as the CPO.
01/11/1999
99-20 PDF Image; Rule 4.7(a); Exemption
The Commission exempted a registered CPO and CTA from certain Part 4 rules such that: (1) it could file the annual reports of certain "funds of funds" (a) within 135 days after year end with respect to those funds that invest only in other domestic investee vehicles, and b) within 155 days after year end with respect to those funds that invest in offshore investee vehicles, rather than within 90 days after year end as required by Rule 4.7; and (2) certain of the funds' books and records could be maintained at the offices of the funds' administrators, custodians or trustees rather than at the main business office of the CPO/CTA.
07/14/1999
99-27 PDF Image; Rule 4.7 (Exemption) and Rule 1.56 (No-Action); No-Action; Exemption
The Division permitted a CPO to claim relief under Rule 4.7 with respect to a commodity pool that had both QEP and non-QEP participants based upon, among others, representation that: 1) 93% of the capital of the participants in the Partnership was attributable to QEPs; and 2) the non-QEPs would not participate in investments by the Partnership in commodity interests, would not share in any profits and losses from the Partnership's commodity interest trading and would not have any Partnership assets allocable to them subject to claim by the Partnership's FCM. While not having non-QEP assets subject to claim by the FCM might implicate Rule 1.56, based upon such factors as the purpose of that rule, the nature of the arrangement and the capitalization of the parties to the arrangement, the Division took a "no-action" position under Rule. 1.56 with respect to the FCM.
07/16/1999
99-29 PDF Image; Rule 4.7(a); Exemption
The Division of Trading and Markets granted an exemption to a CPO which allowed the CPO to treat as QEPs four non-QEP employees of the CTA that advised commodity pools operated by the CPO. The employees were all either executive officers of the CTA or otherwise sophisticated investors.
08/16/1999
99-34 PDF Image; Rule 4.7(a); Exemption
The Division of Trading and Markets granted a CPO an exemption such that it may treat a non-QEP, high-level employee, as a QEP. The Division took this position because, among other things: (1) the employee directed the department of the CPO responsible for reviewing, analyzing, and calculating risk estimates for, all pools operated by the CPO; (2) the employee has worked for the CPO for eight years; (3) the CPO obtained the employee's written consent to be treated as a QEP, and (4) the CPO represented that the employee is fully familiar with the risks associated with the pool in which the employee will invest, and the employee has access to all information relevant to investing in that pool.
08/16/1999
99-35 PDF Image; Rules 4.23 and 4.33; Exemption
The Division of Trading and Markets exempted a CPO and CTA firm from the requirements of Rules 4.23 and 4.33 that the firm must maintain certain books and records in accordance with Rule 1.31 at its main business office. The exemption is subject to the conditions that: (1) the firm will notify the Division if the location of any original books and records changes; (2) the firm remains responsible for ensuring that all books and records required by Rules 4.23 and 4.33 are maintained in accordance with Rule 1.31 and for assuring their availability to the Commission, the NFA, or any other agency authorized to review such books and records in accordance with Commission regulations; (3) within 48 hours after a request by a representative of the foregoing, the firm will obtain the original books and records and provide them for inspection at its main business office; (4) the firm must disclose in its CPO and CTA Disclosure Documents where all Commission required books and records are kept; and (5) the firm remains responsible for compliance with Rules 4.23 and 4.33.
08/26/1999
99-36 PDF Image; Rule 4.7 (a); Exemption
The Division of Trading and Markets provided exemptive relief under Rule 4.7(a) to a registered CPO, notwithstanding the presence of a non-QEP in its fund, where the non-QEP is an officer and principal of the CPO, has over 20 years experience in the financial services industry, and is responsible for the general investment operations of the fund.
08/31/1999
99-38 PDF Image; Rule 4.22 (c), (d); Exemption
Requesting on behalf of a CPO an exemption from filing a certified final report in order to save shareholders the expense that they all agree is not necessary for their protection. CFTC has granted this exemption provided the CPO distributes to participants and files copies with the Commission and NFA an unaudited report for the period ended with the permanent cessation of trading.
08/31/1999
99-39 PDF Image; Rule 4.22 (c), (d); Exemption
Requesting on behalf of a Partnership an exemption from filing a certified final report due to the small number of limited partners and the net asset value of the Partnership on April 17, 1999, in relation to the time and expense of providing an annual certified report, and due to each partner agreeing to waive the audit requirement. CFTC has granted this exemption provided the Partnership files an unaudited annual report for the Partnership for the year ending December 31, 1999, with the Commission and NFA and complies with all other requirements of regulation 4.22
08/05/1999
99-40 PDF Image; Rule 4.23; Exemption
CPO permitted to keep its books and records at other than its main business office - i.e., at the main business office of the person who provided administrative services to the CPO.
08/27/1999
99-41 PDF Image; Rule 4.13(a)(2); Exemption
The Division of Trading and Markets exempted two CPOs from the $200,000 limitation on total gross capital contributions of Rule 4.13(a)(2)(i), such that the CPOs could exclude their contributions and the contribution of the spouse of one of the CPOs for the purpose of determining whether the $200,000 limitation had been exceeded. In taking this action, the Division reviewed and compared the text of paragraphs (a)(2)(i) and (a)(2)(ii) of Rule 4.13 and noted that, at least with respect to pools with relatively limited net asset value (as was the case here), the text of paragraphs could result in an inconsistent application of the rule.
08/11/1999
99-42 PDF Image; Rule 4.7; Exemption
The Division of Trading and Markets denied a request to treat a person who was not a qualified eligible participant as a qualified eligible participant because he did not meet the portfolio requirement of Rule 4.7(a), he was not an officer or principal of the CPO of the exempt pool, and he was not otherwise employed by the CPO.
11/30/1999
99-49 PDF Image; Rule 4.7; Exemption
CPO permitted to treat a trust as a QEP where, among other things, the grantor of the trust: (1) was the chief financial officer of a company owned by one of the four founding limited partners of the Rule 4.7 exempt pool; (2) had been responsible for evaluating and structuring that limited partner's investment in the pool; and (3) continued to oversee the performance of that investment.
11/30/1999
99-50 PDF Image; Rule 4.7; Exemption
CPO permitted to treat an employee as a QEP where the employee: (1) is employed by the CPO as a senior analyst "with responsibility to review all portfolios purchases" for the Rule 4.7 exempt pool; and (2) has been employed by the CPO for the preceding seven years.
11/30/1999
99-52 PDF Image; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO that permits the CPO to treat a non-QEP employee as if he satisfies the QEP criteria of Rule 4.7(a). The employee is an analyst and a trader who assists the managing member of the CPO in the analysis of investment opportunities for and management of the Fund's investment portfolio. The employee has been employed for over eight years in the financial services industry, is an accredited investor as that term is defined in Rule 501 (a)(6) under the Securities Act of 1933 and consents to being treated as a QEP.
11/30/1999
99-53 PDF Image; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO that permits the CPO to treat four non-QEP investors as if they satisfy the QEP criteria of Rule 4.7(a). The investors are either current or former managing directors of the CPO, have substantial experience in the financial services industry, are accredited investors as that term is defined in Rule 501(a)(6) under Securities Act of 1933 and consent to being treated as QEPs.
11/30/1999
99-54 PDF Image; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO that permits the firm to treat the mother and brother of the CPO's sole principal and AP as if they satisfy the QEP criteria of Rule 4.7(a). The mother lives with the CPO's sole principal and AP and he provides her with financial advice and guidance. The brother is involved in the administration of the pool, has experience in international finance, manages his own business and is an accredited investor of that term is defined in Rule 501(a)(6) under the Securities Act of 1933. Both the mother and the brother consent to being treated as QEPs.
11/30/1999
99-55 PDF Image; Rule 4.7(a); Exemption
The Division of Trading and Markets provided exemptive relief to a registered CPO that permits the CPO to treat the non-QEP managing member of the CPO as if he satisfies the QEP criteria of Rule 4.7(a). The managing member is responsible for the management of the fund operated by the CPO, is listed as a principal and an AP of the CPO, has been employed for over sixteen years in the financial services industry, is an accredited investor as the term is defined in Rule 501(a)(6) under the Securities Act of 1933 and consents to being treated as a QEP.
11/15/1999
99-57 PDF Image; Rule 4.23(a); Exemption
The Division of Trading and Markets exempted a CPO from the requirement of Rule 4.23 that a CPO must maintain certain books and records in accordance with Rule 1.31 at its main business office. The exemption is subject to the conditions that: (1) the CPO will notify the Division if the location of any original books and records changes; (2) the CPO remains responsible for ensuring that all books and records required by Rule 4.23 are maintained in accordance with Rule 1.31 and for assuring their availability to the Commission, the NFA, or any other agency authorized to review such books and records in accordance with Commission regulations; (3) within 48 hours after a request by a representative of the foregoing, the CPO will obtain the original books and records and provide them for inspection at its main business office; (4) the CPO must disclose in its Disclosure Document where all Commission required books and records are kept; and (5) the CPO remains responsible for compliance with Rule 4.23.
09/15/1999
99-58 PDF Image; Rule 4.7(a); Exemption
The Division of Trading and Markets granted a CPO an exemption such that it may treat as QEPs five non-QEP employees ("Non-QEPs") of a wholly-owned affiliate of the CPO ("CPO Affiliate") that researches investments and executes trades for the CPO's pools. The Division took this position because, among other things, the CPO represented that each of the Non-QEPs is a knowledgeable employee under the Investment Company Act of 1940, in that each Non-QEP: (i) is an executive officer of the CPO Affiliate, or (ii) regularly participates in the CPO Affiliate's investment activities and has been participating in the CPO Affiliate's or a previous employer's investment activities for at least twelve months.
08/11/1999
99-59 PDF Image; Rule 4.7(b); Exemption
The Division of Trading and Markets granted a CTA an exemption such that it may treat as a QEC an LLC with less than $5 million assets ("Non-QEC"). The Division took this position because, among other things: (1) the member of the LLC who is responsible for all of the LLC's investment decisions and who will have access to all information pertinent to the LLC's trading account in a QEC ("QEC Member"); (2) the QEC Member is a Commission registrant with extensive experience managing commodity interest trading accounts; (3) the QEC Member is the only person who contributed capital to the LLC; (4) the only other member of the LLC is a trust established by the QEC Member; (5) the QEC Member agreed that the LLC may be treated as a QEC; and (6) the QEC Member established both the LLC and the trust for estate planning purposes.
12/14/1999
99-60 PDF Image; Regulation 4.33; Exemption
A registered CTA, given power of attorney to trade client accounts at his discretion, entered into an agreement with another registrant absent requesting and receiving relief. His request for relief was denied.
12/15/1999
99-61 PDF Image; Rules 4.21, 4.22, and 4.23(a)(10) and (a)(11); Exemption
An offshore commodity pool may be granted an exemption from the disclosure, reporting and certain record-keeping requirements of Rules 4.21, 4.22, and 4.23(a)(10) and (a)(11) where: (1) it notifies the Division of Trading and Markets if the location of any books and records required by Rule 4.23(a) changes from that represented; (2) it remains responsible for ensuring that all books and records required by Rule 4.23(a) are maintained in accordance with Rule 1.31 and for assuring their availability; (3) within forty-eight hours after a request, will obtain the books and records; and (4) discloses in each Disclosure Document for the Fund that copies of the books and records are kept by the firm in its office located in the United States.
12/08/1999
99-62 PDF Image; Rule 4.7(a)(2)(iii)(A); Exemption
Indefinite relief granted for "fund to fund" from the time requirements contained in Rule 4.7(a)(2)(iii)(A) regarding the filing of an annual report.
12/14/1999
99-65 PDF Image; Rule 4.23; Exemption
The Division of Trading and Markets provided exemptive relief to an applicant for registration as a CPO, from the requirements of Rule 4.23 that the firm must maintain its books and records at its main business office, so that it could keep certain books and records at a branch office where administrative and accounting functions are performed.
12/22/1999
99-66 PDF Image; 4.22(c) & (d); Exemption
Previously, the CPO of a small pool which commenced trading October 1, 1998, requested exemption from the requirement of Rule 4.22(d) that the pool's 1998 Annual Report be audited. That exemption was granted upon condition that (1) an unaudited 1998 annual report be provided to the participants, and (2) the audited 1999 report would include 1998 data. Subsequently, the small pool closed by the fiscal year ending 1999 and requested exemption from filing a certified Annual Report for the entire 15-month period.

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