Section la(5) and 4k(3) of the Act - Registration Requirements for Entity Which Proposes to Start a Business Advising Farmers How to Hedge by Trading Futures;
The Division of Trading & Markets provided interpretative advice to an entity that is seeking to start a business advising farmers "how to hedge, through trends and using futures." The entity advertises that its services are "designed for you and your farm." The entity purposes to provide its services to clients through the use of facsimiles, seminars and face-to-face interviews. The entity claims that it will not engage in any trading itself, nor recommend specific trades, nor refer clients to specific entities or individuals for the purpose of obtaining trading advice or other services. The Division advised the entity that it is required to register as a commodity trading advisor because the registration requirements are triggered not only when specific transactions are recommended but also when, as here, advice is given as the value or advisability of trading in futures or options. The Division also advised the entity that since the entity's employees responsible for soliciting clients will have not discretionary authority over any commodity interest trading accounts, these individuals will not have to register as APs.