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[Federal Register: October 2, 2000 (Volume 65, Number 191)]
[Rules and Regulations]
[Page 58648-58650]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02oc00-6]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 4

RIN 3038-AB60


Profile Documents for Commodity Pools

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rules.

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SUMMARY: The Commodity Futures Trading Commission (``CFTC'' or
``Commission'') is adopting amendments to its rules to permit commodity
pool operators (``CPOs'') to provide a summary profile document to
prospective commodity pool participants prior to giving them the pool's
complete disclosure document. Certain technical changes to rules
relating to CPOs and commodity trading advisors (``CTAs'') are also
being adopted.

EFFECTIVE DATE: November 1, 2000.

[[Page 58649]]


FOR FURTHER INFORMATION CONTACT: Eileen R. Chotiner, Futures Trading
Specialist, (202) 418-5467, electronic mail: ``[email protected],''
Division of Trading and Markets, Commodity Futures Trading Commission,
1155 21st Street, NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION: On July 27, 2000, the Commission proposed to
amend its rules to allow CPOs to use a profile document to solicit
prospective commodity pool participants prior to providing them with
the pool's Disclosure Document.\1\ The Commission also proposed
amendments to Commission Rule 4.26 to establish procedures for the use,
amendment and filing of profile documents that are parallel to those
applicable to disclosure documents. The proposed rule changes are
intended to accommodate National Futures Association's (``NFA'')
proposed Compliance Rule 2-35(d). In addition, certain technical
amendments related to filings by CPOs and commodity trading advisors
(``CTAs'') were proposed.
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    \1\ 65 FR 46122 (July 27, 2000).
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    The 30-day comment period expired on August 28, 2000. The
Commission received one comment letter, from NFA, which supported the
proposed rule changes. Accordingly, the Commission has determined to
adopt the changes to Rules 4.2, 4.21, 4.26 and 4.36, essentially as
proposed.

Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-611 (1994),
requires that agencies, in proposing rules, consider the impact of
those rules on small businesses. The Commission has previously
established certain definitions of ``small entities'' to be used by the
Commission in evaluating the impact of its rules on such entities in
accordance with the RFA.\2\ The Commission previously has determined
that registered CPOs are not small entities for the purpose of the
RFA.\3\ With respect to CTAs, the Commission has stated that it would
evaluate within the context of a particular rule proposal which all or
some affected CTAs would be considered to be small entities and, if so,
the economic impact on them of any rule.\4\ In this regard, the
Commission notes that the sole effect on CTAs of the rule revisions
adopted herein is to reduce the filing requirement for disclosure
documents. The Commission has previously determined that the disclosure
requirements governing this category of registrant will not have a
significant economic impact on a substantial number of small
entities.\5\ Therefore, the Chairman, on behalf of the Commission,
hereby certifies, pursuant to 5 U.S.C. 605(b), that these regulations
will not have a significant economic impact on a substantial number of
small entities.
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    \2\ 47 FR 18618-18621 (April 30, 1982).
    \3\ 47 FR 18619-18620.
    \4\ 47 FR 18618-18620.
    \5\ See 60 FR 38146, 38181 (July 25, 1995) and 48 FR 35248
(August 3, 1983).
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B. Paperwork Reduction Act

    This rule (Sections 4.31 and 4.33) contains information collection
requirements. As required by the Paperwork Reduction Act of 1995,\6\
the Commission has submitted a copy of this rule to the Office of
Management and Budget (OMB) for its review.\7\ In response to the
Commission's invitation in the proposed rulemaking to comment on any
potential paperwork burden associated with this regulation, no comments
were received.
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    \6\ Pub. L. 104-13 (May 13, 1995).
    \7\ 44 U.S.C. 3504(h).
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List of Subjects in 17 CFR Part 4

    Brokers, Commodity futures, Commodity pool operators, Commodity
trading advisors.


    For the reasons stated in the preamble, the Commission amends 17
CFR Part 4 as follows:

PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS

    1. The authority citation for Part 4 continues to read as follows:
Authority: 7 U.S.C. 1a, 2, 4, 6b, 6c, 6l, 6m, 6n, 6o, 12a and 23.

    2. Section 4.2 is amended by revising paragraph (a) to read as
follows:


Sec. 4.2  Requirements as to filing.

    (a) All material filed with the Commission under this part 4 must
be filed with the Commission at its Washington, DC office (Att: Managed
Funds Branch, Division of Trading and Markets, CFTC, Three Lafayette
Centre, 1155 21st Street, NW., Washington, DC 20581); Provided,
however, that Disclosure Documents, profile documents, and amendments
thereto may be filed at the following electronic mail address: ddoc-[email protected].
* * * * *

    3. Section 4.21 is amended by revising paragraph (a) to read as
follows:


Sec. 4.21  Required delivery of pool Disclosure Document.

    (a)(1) No commodity pool operator registered or required to be
registered under the Act may, directly or indirectly, solicit, accept
or receive funds, securities or other property from a prospective
participant in a pool that it operates or intends to operate unless, on
or before the date it engages in that activity, the commodity pool
operator delivers or causes to be delivered to the prospective
participant a Disclosure Document for the pool containing the
information set forth in Sec. 4.24.
    (2) Notwithstanding the requirements regarding solicitation
specified in paragraph (a)(1) of this section, a commodity pool
operator may provide to a prospective participant either of the
following documents prior to delivery of a Disclosure Document, subject
to compliance with rules promulgated by a registered futures
association pursuant to section 17(j) of the Act:
    (i) A profile document;
    (ii) Where the prospective participant is an accredited investor,
as defined in 17 CFR 230.501(a), a notice of intended offering and
statement of the terms of the intended offering.
* * * * *

    4. Section 4.26 is amended by revising paragraphs (a), (b) and (d)
to read as follows:


Sec. 4.26  Use, amendment and filing of Disclosure Document.

    (a)(1) Subject to paragraph (c) of this section, all information
contained in the Disclosure Document and, where used, profile document,
must be current as of the date of the Document; Provided, however, that
performance information may be current as of a date not more than three
months prior to the date of the Document.
    (2) No commodity pool operator may use a Disclosure Document or
profile document dated more than nine months prior to the date of its
use.
    (b)(1) If the commodity pool operator knows or should know that the
Disclosure Document or profile document is materially inaccurate or
incomplete in any respect, it must correct that defect and must
distribute the correction to:
    (i) All existing pool participants within 21 calendar days of the
date upon which the pool operator first knows or has reason to know of
the defect; and
    (ii) Each previously solicited prospective pool participant prior
to accepting or receiving funds, securities or other property from any
such prospective participant.
    (2) The pool operator may furnish the correction by any of the
following means:
    (i) An amended Disclosure Document or profile document;

[[Page 58650]]

    (ii) With respect to a hard copy of the Disclosure Document, a
sticker affixed to the Disclosure Document; or
    (iii) Other similar means.
    (3) The pool operator may not use the Disclosure Document or
profile document until such correction has been made.
* * * * *
    (d) Except as provided by Sec. 4.8:
    (1) The commodity pool operator must file with the Commission one
copy of the Disclosure Document and, where used, profile document for
each pool that it operates or that it intends to operate not less than
21 calendar days prior to the date the pool operator first intends to
deliver such Document or documents to a prospective participant in the
pool; and
    (2) The commodity pool operator must file with the Commission one
copy of the subsequent amendments to the Disclosure Document and, where
used, profile document for each pool that it operates or that it
intends to operate within 21 calendar days of the date upon which the
pool operator first knows or has reason to know of the defect requiring
the amendment.

    5. Section 4.36 is amended by revising paragraph (d) to read as
follows:


Sec. 4.36  Use, amendment and filing of Disclosure Document.

* * * * *
    (d)(1) The commodity trading advisor must file with the Commission
one copy of the Disclosure Document for trading program that it offers
or that it intends to offer not less than 21 calendar days prior to the
date the trading advisor first intends to deliver the Document to a
prospective client in the trading program; and
    (2) The commodity trading advisor must file with the Commission one
copy of the subsequent amendments to the Disclosure Document for each
trading program that it offers or that it intends to offer within 21
calendar days of the date upon which the trading advisor first knows or
has reason to know of the defect requiring the amendment.

    Issued in Washington, DC, on September 25, 2000 by the
Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 00-24984 Filed 9-29-00; 8:45 am]
BILLING CODE 6351-01-M
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