CFTC clarifies and expands relief relating to delegation of commodity pool operator responsibilities

2015 ◽  
Vol 16 (1) ◽  
pp. 69-73
Author(s):  
Cary Meer ◽  
Lawrence B. Patent
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Commodity Futures ◽  
Investment Management ◽  
Futures Trading ◽  
Content Type ◽  
Commodity Futures Trading Commission ◽  
Practical Guidance

Purpose – To explain CFTC No-Action Letter 14-126, issued on October 15, 2014 by the Commodity Futures Trading Commission Division of Swap Dealer and Intermediary Oversight, which sets forth a number of conditions with which a commodity pool operator (“CPO”) that delegates its CPO responsibilities (“Delegating CPO”) to a registered CPO (“Designated CPO”) must comply in order to take advantage of no-action relief from the requirement to register as a CPO. Design/methodology/approach – Explains the modified conditions provided by Letter 14-126, including clarification of the permissible activities in which a Delegating CPO seeking to take advantage of registration no-action relief may engage regarding investment management, solicitation, and management of pool property; lists other criteria carried over from Letter 14-69 of May 12, 2014; provides analysis and discusses limitations of the relief provided by the CFTC No-Action letter. Findings – The letter makes more liberal several of the conditions set forth in CFTC Letter 14-69 of May 12, 2014, with which many Delegating CPOs could not comply. Originality/value – Practical guidance from experienced financial services lawyers.

Commodity Futures Trading Commission provides new streamlined process for commodity pool operators to request no-action relief for delegating certain activities to registered CPOs

2014 ◽  
Vol 15 (3) ◽  
pp. 41-46
Author(s):  
Walid Khuri ◽  
Robert M. McLauglin ◽  
David S. Mitchell ◽  
David W. Selden
Keyword(s):  
Asset Management ◽  
Design Methodology ◽  
Commodity Futures ◽  
Futures Trading ◽  
Commodity Exchange ◽  
Content Type ◽  
Commodity Futures Trading Commission ◽  
Practical Guidance

Purpose – To provide an overview of a new, streamlined process from the Division of Swap Dealer and Intermediary Oversight (DSIO) of the Commodity Futures Trading Commission (CFTC) by which a commodity pool operator (CPO) may request expedited no-action relief for failure to register under Section 4m(1) of the Commodity Exchange Act if such CPO has designated another, registered CPO to serve as the CPO of the commodity pool. Design/methodology/approach – Explains the background to the CPO registration no-action relief related to CPO delegation and the streamlined process for requesting no-action relief, including the procedure for requesting relief and the applicable criteria that must be satisfied to utilize the streamlined process. Findings – By providing an alternative, streamlined process for requesting no-action relief from CPO registration in the context of delegation arrangements in certain circumstances, the CFTC staff is attempting to facilitate obtaining such relief, particularly since relief may be sought on behalf of multiple commodity pools by means of a single request. However, the criteria that must be fulfilled in order to utilize the streamlined process are not necessarily applicable to all CPOs and in all scenarios. Thus, certain CPOs may need to request no-action relief outside of the new, streamlined process or consider alternative fund structures. Originality/value – Practical guidance from experienced asset management lawyers.

CFTC adopts amendments to position limit aggregation rules

2017 ◽  
Vol 18 (2) ◽  
pp. 31-35
Author(s):  
J.P. Bruynes ◽  
Jason Daniel ◽  
Libbie Walker
Keyword(s):  
Design Methodology ◽  
Final Position ◽  
Limited Time ◽  
Futures Trading ◽  
Content Type ◽  
Final Rule ◽  
Commodity Futures Trading Commission ◽  
Practical Guidance ◽  
Trading Program ◽  
Independent Account

Purpose To explain the final position limit aggregation rules and exemptions pertaining to derivative positions in nine agricultural commodities adopted by the Commodity Futures Trading Commission on December 5, 2016 and effective February 14, 2017, the notice filing deadline with respect to which was extended by the CFTC by limited time no-action relief until August 14, 2017. Design/methodology/approach Explains the position limit aggregation rules and exemptions pertaining to equity interests in owned entities, ownership or equity interests in pooled accounts or positions, positions of an “eligible entity” in connection with client positions carried by an “independent account controller,” positions held by futures commission merchants (FCMs) in discretionary accounts or customer trading program accounts, equity interests of underwriters based on unsold allotments of securities in distributions, broker-dealers if the equity interest is acquired in the normal course of business and positions for which information cannot be collected without risk of violating a law. Findings Unless an exemption from aggregation is available, all positions in accounts for which any person controls the trading or holds a 10 per cent or greater ownership or equity interest must be aggregated with positions held, and trading done, by such person. The final rule adds several new exemptions, including for persons with a 10 per cent or greater ownership or equity interest in an entity so long as certain conditions establishing independence are met. The final rule requires notice filing to take advantage of most exemptions from aggregation. Originality/value Practical guidance from experienced lawyers specializing in securities, funds, and investment management.

CFTC enforcement trends in 2017 and considerations for 2018

2018 ◽  
Vol 19 (3) ◽  
pp. 17-21
Author(s):  
Peter Malyshev ◽  
Jennifer Achilles ◽  
Jill Ottenberg ◽  
Jessica Stumacher
Keyword(s):  
Design Methodology ◽  
Commodity Futures ◽  
Futures Trading ◽  
Content Type ◽  
Commodity Futures Trading Commission ◽  
Recent Trends ◽  
Enforcement Activity

Purpose This paper aims to discuss the types of cases that were brought by the Commodity Futures Trading Commission (CFTC) in 2017 and what to expect in 2018. Design/methodology/approach This paper discusses the overall statistics regarding enforcement actions brought by the CFTC, as well as the amount of restitution, disgorgement and penalties collected in 2017. These statistics are contrasted with the same statistics from 2016. This paper also discusses the types of enforcement actions brought by the CFTC in 2017 and identifies and analyzes trends. The analysis also includes a discussion of what to expect in 2018. Findings This paper concludes that 2017 was a year filled with personnel changes and vacancies at the CFTC, which resulted in no major policymaking cases being brought by the CFTC. This paper also finds that the CFTC is focused on actively monitoring the markets, and will continue to pursue actions involving reporting violations, fraud, manipulation, cryptocurrencies, and disruptive trade practices while rewarding parties for self-reporting and cooperation. Originality/value This paper contains valuable information from experienced lawyers regarding personnel changes at the CFTC, recent trends in CFTC enforcement activity and what to expect in 2018.

Commodity Futures Trading Commission issues advisory for virtual currency pump-and-dump schemes

2018 ◽  
Vol 19 (3) ◽  
pp. 42-44 ◽  
Author(s):  
Richard Rosenfeld ◽  
Alex Lakatos ◽  
David Beam ◽  
Jennifer Carlson ◽  
Nina Flax ◽  
...  
Keyword(s):  
Financial Services ◽  
Commodity Futures ◽  
Futures Trading ◽  
Virtual Currency ◽  
Content Type ◽  
Market Participants ◽  
Social Media Platforms ◽  
Practical Guidance ◽  
Precautionary Measures ◽  
The Government

Purpose The purpose of this paper is to explain innocent actors in the virtual currency space (e.g. virtual currency exchanges, financial institutions, social media platforms) and how to avoid potential exposure because of the misconduct of users or customers. Design/methodology/approach Explains how pump-and-dump securities and commodities fraud schemes work, explains the Commodity Futures Trading Commission’s warning to consumers about how to avoid being victimized by schemers running pump-and-dump schemes in the virtual currency space, explains how innocent well-meaning actors may – because of misconduct by their customers or users – be at risk of exposure to victims of pump-and-dump schemes and provides practical guidance for avoiding these dangers and remediating problems. Findings Market participants must protect their reputations, and they cannot rely on the government to do so for them. Moreover, because investors who fall prey to fraud may be unable to recover from fraudsters, such investors may seek to recover from innocent market participants. Accordingly, market participants should take precautionary measures to avoid being used by fraudsters. Originality/value Practical guidance from experienced securities and financial services litigators.

CFTC enters the market for anti-corruption enforcement

2019 ◽  
Vol 20 (3) ◽  
pp. 32-38
Author(s):  
Alice S. Fisher ◽  
Douglas K. Yatter ◽  
Douglas N. Greenburg ◽  
William R. Baker III ◽  
Benjamin A. Dozier ◽  
...  
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Department Of Justice ◽  
Futures Trading ◽  
Voluntary Reporting ◽  
Content Type ◽  
The Us ◽  
Complex Landscape ◽  
Commodity Futures Trading Commission ◽  
And Training

Purpose This paper aims to analyze the March 6, 2019 enforcement advisory in which the Division of Enforcement (Division) of the US Commodity Futures Trading Commission (CFTC or Commission) announced that it will work alongside the US Department of Justice (DOJ) and other agencies to investigate foreign bribery and corruption relating to commodities markets. Design/methodology/approach This paper explains the enforcement advisory and outlines key considerations for industry participants and their compliance teams, including the CFTC’s plan to investigate in parallel with other enforcement authorities, an expansion of the CFTC’s existing self-reporting, cooperation and remediation policy to address foreign corruption and the CFTC’s focus on market and economic integrity, and provides guidelines for commodities companies concerning anti-corruption compliance and training programs, investigating potential incidents of bribery and corruption, reporting obligations under the Commodity Exchange Act (CEA) and CFTC regulations, voluntary reporting of incidents of foreign corruption and whistleblowing. Findings The CFTC announcement adds a new dimension to an already crowded and complex landscape for anti-corruption enforcement. A range of industries, including energy, agriculture, metals, financial services, cryptocurrencies and beyond, must now consider the CFTC and the CEA when assessing global compliance and enforcement risks relating to bribery and corruption. Originality/value Expert guidance from lawyers with broad experience in white collar defense, investigations, financial services, securities, commodities, energy and derivatives.

CFTC modernizes Rule 1.31 recordkeeping requirements

2017 ◽  
Vol 18 (4) ◽  
pp. 45-49 ◽  
Author(s):  
David S. Mitchell ◽  
Robert M. McLaughlin ◽  
William J. Breslin ◽  
Victoria T. Mazgalev ◽  
Scott I. Golden
Keyword(s):  
Design Methodology ◽  
New Technologies ◽  
Commodity Futures ◽  
Futures Trading ◽  
Commodity Exchange ◽  
Content Type ◽  
Technological Developments ◽  
Practical Guidance ◽  
Practical Impact

Purpose To provide an overview of the Commodity Futures Trading Commission’s (the “CFTC” or “Commission”) recent amendments to CFTC Rule 1.31, which sets forth recordkeeping requirements for all records required to be kept pursuant to the Commodity Exchange Act (“CEA”) and Commission regulations. Design/methodology/approach This article discusses the significant May 2017 amendments to CFTC Rule 1.31 and the practical impact of these amendments for entities subject to the rule’s requirements. Findings The CFTC’s recordkeeping amendments do not impose any new substantive recordkeeping requirements, but modernize and make technology neutral the form and manner in which regulatory records must be kept. By eliminating a number of prescriptive and outdated requirements, the amendments should provide greater flexibility to “records entities” to adopt new technologies in response to evolving technological developments. Originality/value Practical guidance from experienced commodities, futures and derivatives lawyers.

SEC publishes guidance on mutual fund distribution and sub-accounting fees

2016 ◽  
Vol 17 (2) ◽  
pp. 39-42 ◽  
Author(s):  
Marco Adelfio ◽  
Paul J. Delligatti ◽  
Jason F. Monfort
Keyword(s):  
Mutual Funds ◽  
Mutual Fund ◽  
Financial Services ◽  
Design Methodology ◽  
Investment Management ◽  
Content Type ◽  
Enforcement Action ◽  
Policies And Procedures ◽  
Practical Guidance ◽  
Investment Advisers

Purpose To explain the guidance published on January 6, 2016 by the SEC’s Division of Investment Management containing its views and recommendations relating to mutual fund distribution and sub-accounting fees. Design/methodology/approach Explains the SEC’s Office of Compliance Inspections and Examinations focus on “distribution in guise” payments, its 2013 “sweep exam,” an enforcement action against a fund’s adviser and affiliated distributor related to payments for distribution-related activities outside of a 12b-1 plan, lists SEC staff recommendations with respect to mutual fund distribution and sub-accounting fees, summarizes the SEC’s guidance on board oversight of sub-accounting fees, provides indicia that a payment may be for distribution-related activities, and points to the need for mutual funds to have policies and procedures designed to prevent violations of Section 12(b) and Rule 12b-1. Findings The guidance is an outgrowth of the staff’s observations from a three-year “distribution in guise” sweep exam of mutual fund complexes, investment advisers, broker-dealers and transfer agents conducted by the SEC’s Office of Compliance Inspections and Examinations and other offices and divisions of the SEC to identify whether firms were using fund assets to directly or indirectly finance any activities primarily intended to result in the sale of fund shares outside of an approved Rule 12b-1 distribution plan. Originality/value Practical guidance from experienced financial services lawyers.

CFTC overhauls customer protection requirements

2014 ◽  
Vol 15 (1) ◽  
pp. 25-32 ◽  
Author(s):  
Robert M. Brown
Keyword(s):  
Design Methodology ◽  
Commodity Futures ◽  
Regulatory Regime ◽  
Futures Trading ◽  
Content Type ◽  
Regulatory Response ◽  
Market Participants ◽  
Policies And Procedures ◽  
Practical Implications

Purpose – The purpose of the paper is to summarize the Commodity Futures Trading Commission's (CFTC) recent overhaul of its customer protection rules, which regulate how futures commission merchants (FCMs) and derivatives clearing organizations (DCOs) handle customer funds. Design/methodology/approach – The paper summarizes the most significant aspects of the CFTC's October 30, 2013 customer protection rulemaking, explains FCM and DCO obligations under the new regulatory regime, and sets forth a compliance timeline. Findings – The CFTC's recent overhaul of its customer protection rules impose significant new requirements on FCMs and DCOs in their handling of customer funds. Practical implications – All FCMs and DCOs that handle customer funds should review these new rules and begin putting into place policies and procedures to ensure their compliance as each new requirement comes into effect. Originality/value – The CFTC's overhaul of its customer protection regime is new and significant. FCMs and DCOs need to understand their new obligations under the rules. As these new rules are the CFTC's regulatory response to the events that led to the insolvencies of MF Global and Peregrine Financial Group, these developments also should be of interest to futures and swaps market participants generally.

FINRA relaxes restrictions on pre-inception performance data

2019 ◽  
Vol 20 (3) ◽  
pp. 6-9
Author(s):  
Richard F. Kerr ◽  
Matthew J. Rogers
Keyword(s):  
Design Methodology ◽  
Performance Data ◽  
Exchange Traded Funds ◽  
Investment Management ◽  
Content Type ◽  
Investment Companies ◽  
Practical Guidance ◽  
Marketing Materials ◽  
Important Shift

Purpose To explain the significance of a recently issued interpretive letter in which FINRA staff agreed to permit the use of pre-inception index performance data by passively managed, registered open-end investment companies. Design/methodology/approach FINRA recently issued an interpretive letter extending previously issued guidance by permitting passively managed open-end registered investment companies including separately-managed series of a business trust to use pre-inception index performance data in Institutional Communications. Findings The 2019 Letter is an important shift in how FINRA staff views PIP data in Institutional Communications by acknowledging that passively managed open-end funds should be treated in a similar manner as passively managed exchange-traded funds. This shift will be a welcome development for FINRA member firms wishing to include PIP data in marketing materials for the passively managed open-end funds they distribute. Originality/value Practical guidance from experienced investment management and broker-dealer lawyers.

SEC flexes its muscle on accounting fraud and targets more individuals

2016 ◽  
Vol 17 (2) ◽  
pp. 50-53
Author(s):  
David Woodcock ◽  
Joan McKown
Keyword(s):  
Financial Reporting ◽  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Internal Controls ◽  
Accounting Fraud ◽  
Department Of Justice ◽  
Content Type ◽  
Practical Guidance ◽  
A Priority

Purpose To note the increase in accounting and financial reporting matters at the Securities and Exchange Commission by highlighting a number of recent cases filed by the agency. Design/methodology/approach The SEC recently announced the settlement or filing of a number of significant accounting fraud cases. Coupled with recent statements by the SEC and the Department of Justice, it is clear that accounting fraud is a priority and that individuals are in the cross-hairs. This article discusses a few of the recent cases and the trend toward more financial reporting and issuer disclosure cases. Findings The number of financial reporting and issuer disclosure cases will likely continue to increase. Individuals will be targeted in more of those cases, internal controls will be a focus, whistleblowers will continue to be important in this area, and SOX 304 clawbacks will continue to be a weapon for the SEC. Originality/value Practical guidance from experienced securities and financial services lawyers.

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