The CFTC staff has issued a no-action letter regarding family offices. The letter states that staff will not recommend that the CFTC take enforcement action against the operators of family offices for failure to register as commodity pool operators, or CPOs, under the Commodity Exchange Act and the CFTC’s regulations, subject to certain conditions described in the letter.
In February 2012, the CFTC promulgated certain amendments to Part 4 of the CFTC’s regulations. This included the rescission of Regulation 4.13(a)(4), which had previously exempted from registration CPOs who operated a pool for only those individuals who met a certain “qualified eligible person” standard. In general, family offices relied on Regulation 4.13(a)(4) as an exemption from registration. Pursuant to these recent amendments, absent affirmative relief, the CFTC believes many family offices would be required to register with the CFTC as a CPO.
The no-action letter states the staff will not recommend enforcement action for failure to register with the CFTC as a CPO against any CPO that is a family office as defined by the SEC, provided that the CPO:
- submits a claim to take advantage of the relief, and
- remains in compliance with The SEC’s Rule 202(a)(11)(G)-1 under the Investment Advisers Act, regardless of whether the CPO seeks to be excluded from the Investment Advisers Act.
The relief is not self-executing and the non-action letter states what must be filed with the CFTC to perfect the claim for relief.
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