Lowenstein Sandler’s Investment Management Group is pleased to provide you with (i) a summary of recent legislative and regulatory developments that impact the investment management community and (ii) checklists of annual considerations for private investment funds, investment advisers, commodity trading advisors, and commodity pool operators. The checklists appear after the legislative and regulatory summary. For more information regarding any matter covered in this update, please contact one of the attorneys in our Investment Management Group.



CFTC Streamlines Regulations for Commodity Pool Operators and Commodity Trading Advisors 

Synopsis: On October 9, 2018, the Commodity Futures Trading Commission (“CFTC”) unanimously approved proposed rules streamlining regulations for commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”). These rules are part of the CFTC’s Keep It Simple, Stupid (KISS) Initiative, which seeks to simplify and modernize the CFTC’s rules. These rules ease reporting requirements on CPOs and CTAs.

Status: The rules codify long-standing staff advisories and no-action letter relief and include the following changes:

  • CPOs that only solicit and/or accept funds from non-U.S. persons for participation in offshore commodity pools may claim an exemption from CPO registration and compliance requirements with respect to such pools, while maintaining registration with respect to commodity pools for which CPO registration is required.
  • U.S.-based CPOs of offshore commodity pools that have U.S. participants are now able to maintain the commodity pool’s original books and records in the offshore location of the pool.
  • A person who would be statutorily disqualified from registering with the CFTC as a CPO is prohibited from claiming or affirming an exemption from CPO registration.
  • Registration relief is granted for CPOs and CTAs of entities qualifying as family offices.
  • Investment advisers to business development companies are now excluded from the definition of CPO under 17 CRF § 4.5, in the same manner as investment advisers to registered investment companies.
  • Qualifying CPOs are able to engage in general solicitation with respect to their pool offerings, as envisioned by the JOBS Act of 2012.
  • CPOs that operate only commodity pools exempt or excluded under 17 CRF §§ 4.5 and 4.13 are granted relief from filing Form CPO-PQR, which requires CPOs to periodically report detailed information regarding pools and other funds that the CPOs operate.
  • Certain CTAs are granted relief from filing Form CTA-PR, which requires CTAs to report general information about the CTA and its trading programs.
  • CTAs that do not direct trading of any commodity interest accounts are granted relief from filing.
  • Registered CTAs that advise only pools in which the CTA is also a CPO are granted relief from filing.

Read the full alert here.