CFTC Issues CPO Recordkeeping and Disclosure Relief

August 21, 2013

The Commodity Futures Trading Commission (the “CFTC”) recently adopted rules that allow a commodity pool operator (a “CPO”) to maintain records with a third party and ease the Disclosure Document requirements.

A CPO may now delegate its recordkeeping obligations to a third party, provided that the CPO must first file statements with the CFTC and with the National Futures Association and must meet other conditions, including maintaining timely access to the records. A CPO that delegates its recordkeeping obligations will remain responsible for ensuring that all books and records are kept in accordance with CFTC Rule 1.31.

Certain CPOs, not including those that are exempt from registration under Rule 4.13 or those that are relying on Rule 4.7, are required to prepare and deliver a Disclosure Document that meets the requirements of the CFTC’s rules. Such a CPO is now permitted to use a Disclosure Document for up to twelve months. Previously, a Disclosure Document could only be used for up to nine months. In addition, a CPO is no longer required to obtain a signed acknowledgement of receipt of the Disclosure Document before accepting funds from an investor.

If you have any questions concerning the foregoing, please contact your primary attorney in Seward & Kissel’s Investment Management Group.