Alert December 04, 2012

CFTC Staff Issues No-Action Relief from CPO Registration for Advisors Meeting SEC Family Office Investment Adviser Definition

The staff of the CFTC’s Division of Swap Dealer and Intermediary Oversight (the “Staff”) issued a no-action letter stating that it will not recommend that the SEC take an enforcement action for failure to register as a commodity pool operator (“CPO”) against a CPO that meets the definition of “family office” in SEC Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (the “SEC Family Office Rule”).  Adopted by the SEC in June 2011, the SEC Family Office Rule defines “family office” for purposes of the exclusion from the definition of “investment adviser” in Section 202(a)(11)(G) of the Advisers Act, which was added by the Dodd-Frank Act.  (See the June 23, 2011 Goodwin Procter Alert for a detailed discussion of the SEC Family Office Rule and the February 14, 2012 Financial Services Alert for a discussion of a subsequent SEC staff FAQ on the SEC Family Office Rule.)

Notice of Claim.  To rely on the Staff’s guidance, a CPO must comply with the SEC Family Office Rule, as amended, regardless of whether it “seeks to be excluded from the Investment Advisers Act of 1940,” and must file a notice of claim with the CFTC.  The notice of claim must provide certain identifying information for the CPO claiming the relief and, where applicable, the name of the pool(s), for which the claim is being filed.

Deadlines.  A CPO in operation as of December 1, 2012 seeking to rely on the relief must file its notice of claim by December 31, 2012, and by March 31, 2013, must confirm that (i) it is a family office within the meaning and intent of the SEC Family Office Rule and (ii) it will notify the Division if it is no longer a family office within the meaning and intent of the SEC Family Office Rule.  A CPO that commences operations after December 1, 2012 must, within 30 days after it begins to operate as a family office, file its notice of claim, and confirm that (a) it is a family office within the meaning and intent of the SEC Family Office Rule and (b) it will notify the Division if it is no longer a family office within the meaning and intent of the SEC Family Office Rule.