| | | | | the "small pool exemption." |
| Are there exemptions from registration as a | | | | |
| commodity pool operator for a small hedge fund? | | | | Section 4.13(a)(3) generally provides for |
| | | | | exemption from registration as a commodity pool |
| Section 4.7 of Commodity Future Trading | | | | operator where: Aggregate initial margin and |
| Commission Rules provides for certain | | | | premiums do not exceed 5% of the liquidation |
| exemptions from certain requirements with | | | | value of the portfolio and the aggregate net |
| respect to commodity pool operators making | | | | motional value of the positions does not exceed |
| offerings to qualified eligible persons or commodity | | | | 100% of the liquidation value of the pool portfolio. |
| trading advisors with respect to advising qualified | | | | |
| eligible persons. Under Section 4.7, the pool | | | | Section 4.13(a)(4) generally provides for |
| operator is exempted from certain disclosure | | | | exemption from registration as a commodity pool |
| compliance requirements. Specifically, Section 4.21 | | | | operator where: The person reasonably believes, |
| with respect to required delivery of a pool | | | | at the time of investment (or, in the case of an |
| disclosure document, Section 4.24 with respect to | | | | existing pool, at the time of conversion to a pool |
| the contents of the disclosure document in | | | | meeting the criteria of paragraph (a)(4) of this |
| general, Section 4.25 with respect to | | | | section), that: (A) Each natural person participant |
| requirements relating to the disclosure of past | | | | (including such person's self-directed employee |
| performance and Section 4.26 with regard to use | | | | benefit plan, if any), is a "qualified eligible person," |
| amendment and filing of a disclosure document. | | | | as that term is defined in section 4.7(a)(2); This |
| The Section 4.7 exemption is not an exemption | | | | exemption can not be claimed if the natural |
| from registration as a commodity pool operator | | | | person participants only meet the 4.7(a)(3) |
| or commodity trading advisor. | | | | portfolio requirement. |
| | | | | If I start up a Fund of Funds and allocate among |
| Section 4.13 generally provides for exemption | | | | equity and futures funds what kinds of |
| from registration as a commodity pool operator. | | | | registration issues do I need to be concerned |
| Before its amendment in August of 2003, a | | | | with? |
| person was not required to register as a | | | | As a Fund of Funds you must be aware of each |
| commodity pool operator if the person did not | | | | particular states Investment Advisor rules. Many |
| receive any compensation or payment directly or | | | | states have exemptions from registration. Also if |
| indirectly; operated only one commodity pool at a | | | | you intend to invest in futures or commodity |
| time; was not otherwise required to register with | | | | funds, you should register with the National |
| the commission; and either the person or other | | | | Futures Association (NFA) and the Commodity |
| person involved with the pools does any | | | | Futures Trading Commission (CFTC) as a |
| advertising in connection with the pool or to the | | | | Commodity Pool Operator (CPO). |
| total gross capital contributions for participation | | | | This CPO's associated person must successfully |
| units in all pools that are operated, or intends to | | | | complete the NASD Series 3 examination. |
| operate, do not in the aggregate exceed | | | | Are there any other types of finders available to |
| $400,000 and none of the pools operated have | | | | issuers in a private placement? |
| more than 15 participants. This is referred to as | | | | |