On March 13, 2013, the Division of Swap Dealer and Intermediary Oversight (the “Division”) of the CFTC issued four no-action letters granting relief from the requirement to register as a commodity pool operator (“CPO”) to the general partner (with respect to a pool organized as a limited partnership) or managing member (with respect to a pool organized as a limited liability company) of certain commodity pools (each, a “Pool”). While the facts varied slightly among the no-action letters, generally, relief was granted allowing affiliated investment managers to whom the general partner or managing member had delegated all of its management authority to serve as the CPO of any such Pool, subject to the following conditions being met:
- The general partner or managing member, as applicable, and the investment manager are under common ownership and control;
- All investment authority has been delegated by the general partner or managing member, as applicable, to the investment manager and the general partner or managing member does not solicit investors for or manage assets of the Pool;
- The investment manager is registered or is in the process of registering as a CPO with the CFTC;
- The books and records of the general partner or managing member, as applicable, are maintained at offices of the investment manager;
- The general partner or managing member, as applicable, does not have any employees (or other person acting on its behalf) and is not otherwise subject to regulation under the CEA or the CFTC regulations (including with respect to activities that would require registration as a commodity trading advisor); and
- The general partner or managing member, as applicable, is not statutorily disqualified under Section 8a(2) or Section 8a(3) of the CEA.
These letters are consistent with relief previously granted by the CFTC staff, including the Division’s Frequently Asked Questions (the “FAQ”) regarding CPO and CTA compliance obligations that was issued on August 14, 2012. In the FAQ, the Division indicated generally that such delegations would be permissible, provided that requirements similar to those set forth in no-action letters issued prior to the release of the FAQ were met. The FAQ was discussed in detail in the September 26, 2012 Investment Management Regulatory Update.