Alert March 16, 2010

CFTC Grants No-Action Relief from CPO Registration Requirements in Context of Common Control Entities

The CFTC’s Division of Clearing and Intermediary Oversight provided no-action relief from the requirement that each entity in a group under common ownership and control register as a commodity pool operator (“CPO”) in order to serve as the managing member, general partner or sole voting shareholder of a fund.  The various entities in the group were created to facilitate favorable tax treatment of performance allocations paid by the funds.  In seeking the relief, among other things, the members of the group represented that (a) they would delegate all discretionary authority with respect to the funds to a member of the group that is registered as CPO of the funds, (b) the members of the group would submit to the Division a written acknowledgement of joint and several liability for a violation by any of them of the Commodity Exchange Act or CFTC rules, and (c) they would comply with other conditions on their personnel and the scope of their activities with respect to the funds.