On June 25, 2013, the U.S. Court of Appeals for the District of Columbia affirmed the district court’s decision in a lawsuit brought by the In-vestment Company Institute and the U.S. Cham-ber of Commerce against the CFTC concerning amendments to CFTC Reg. 4.5. The Appeals Court upheld the amendments, whether nar-rowed the CPO exclusion previously available for advisers to registered investment companies (“RICs”) and established new reporting obliga-tions under CFTC Reg. 4.27. Amended Reg. 4.5 requires RIC advisers engaging in non-hedging commodity trading exceeding certain thresholds to register as CPOs, unless alternative relief is available. In addition, amended Reg. 4.5 requires CPO registration if the RIC makes statements that the CFTC regards as marketing a product as a ve-hicle for trading in the commodity market. Fur-ther, such RICs would need to comply with new CFTC Reg. 4.27 reporting obligations, which are to be harmonized with SEC rules. A copy of the opinion is available here.

The CFTC has not adopted final rules to harmo-nize its Reg. 4.27 reporting obligations with the SEC requirements, which may be the basis for fu-ture legal challenge. It is unclear how the CFTC will exercise its new authority before this har-monization occurs.

RICs should review their commodity trading lev-els and marketing materials to determine whether they need to register as CPOs.