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Please forward this error screen to 75. SEC’s statutory and regulatory compliance regime to which it or the Registered Fund is already subject. SEC staff views regarding certain disclosure and compliance requirements for Registered Funds that invest in commodity interests. Under the Harmonization Rules, a Registered Fund CPO may comply with the CFTC’s Part 4 regulations applicable to all CPOs or elect, pursuant to an amended Regulation 4.
SEC requirements through substituted compliance, subject to certain conditions. CFTC’s Disclosure Document requirements in Regulations 4. CPO and that have investment objectives, policies and strategies substantially similar to those of the Registered Fund. See discussion below regarding the IM Guidance’s statements relating to implementing this requirement. Account Statement preparation and distribution requirements of Regulations 4. CFTC, permits Registered Fund CPOs to maintain books and records with certain third parties, rather than exclusively at the CPO’s main office, provided that the CPO files a notice with the NFA of its intent to use third party service providers for recordkeeping purposes.
The relief provided by the Harmonization Rules generally is available to operators of any investment company that is registered under the Investment Company Act. However, as discussed in more detail below, the CFTC also adopted other rule amendments that provide relief to all CPOs. The Harmonization Rules provide Registered Fund CPOs with the option either to comply with the Disclosure Document content and delivery requirements in the Part 4 regulations or rely upon the substituted compliance exemption from these requirements in amended Regulation 4. The following paragraphs briefly summarize certain significant disclosure exemptions for Registered Fund CPOs that elect to rely on amended Regulation 4.
Under the Harmonization Proposal, the CFTC would have required Registered Fund CPOs to include the break-even table required by Regulation 4. The Harmonization Rules provide an exemption for Registered Fund CPOs from the fee disclosure requirements in the CFTC’s Part 4 regulations. Under the Harmonization Proposal, the CFTC would have required Registered Fund CPOs to include the Cautionary Statement required by Regulation 4. Risk Disclosure Statements required by Regulation 4.
Under the final Harmonization Rules, Registered Fund CPOs are not required to include these disclosures, and instead are permitted to include a reference to the CFTC in the existing statement prescribed by the SEC under Securities Act Rule 481. The Harmonization Proposal also would have required Registered Fund CPOs to comply with the other risk disclosure requirements in Regulation 4. The IM Guidance indirectly acknowledged this requirement and reminded registrants that, if the registration statement for a Registered Fund includes information concerning the performance of private accounts or other funds managed by the Registered Fund’s adviser, the Registered Fund is responsible for ensuring that the information is not materially misleading. Under prior CFTC rules, a CPO or CTA could not use a Disclosure Document dated more than nine months prior to the date of its use. In the Harmonization Adopting Release, the CFTC acknowledged that CPOs and CTAs could realize efficiencies if the updating requirements of the Part 4 regulations were aligned with the time period mandated for filing annual financial statements.
As a result, the Harmonization Rules amended CFTC Regulations 4. The CFTC noted, however, that the federal securities laws require a Registered Fund’s registration statement to be updated annually within four months after the end of the Registered Fund’s fiscal year. A CPO must correct any incompleteness or material inaccuracy in its Disclosure Document of which it becomes aware and distribute the correction to participants within 21 calendar days in order to provide participants with timely corrected information. By comparison, the federal securities laws prohibit the offer or sale of a security by means of a materially misleading prospectus and impose liability for the use of such a prospectus. CPOs currently must submit all Disclosure Documents to the NFA at least 21 calendar days prior to distributing the document to participants and submit updates to Disclosure Documents to the NFA to correct material inaccuracies or incompleteness within 21 calendar days of becoming aware of the defects. Similarly, a Registered Fund must file a registration statement, and any amendments thereto, with the SEC.
Under the current rules, all CPOs are required to deliver a Disclosure Document to each prospective participant and to obtain from that prospective participant a signed acknowledgment of receipt of the Disclosure Document before accepting or receiving funds from that participant. Under the federal securities laws, a Registered Fund investor must receive a prospectus no later than the confirmation of the transaction. A CPO is required to disclose information regarding the investment program, risks, fees, and performance information, among other items, in its pool’s Disclosure Document. Similarly, an open-end Registered Fund is subject to specific disclosure requirements regarding its investment objectives, policies, expenses and performance, among other items. In the Harmonization Adopting Release, the CFTC addressed the disparate treatment of pools under its regime and that of the SEC.
The SEC permits Registered Funds that are organized as series entities with inter-series limitations of liability to include multiple series in a single registration statement, with reporting and disclosure accomplished on a series-by-series basis. Under the Harmonization Proposal, Registered Fund CPOs would have been required to comply with the monthly account statement requirement under Regulation 4. In the Harmonization Adopting Release, the CFTC amended Regulation 4. The Harmonization Adopting Release does not extend relief to Registered Fund CPOs from the annual report requirements under Regulations 4. However, the CFTC staff has confirmed to us that a Registered Fund CPO is exempt from these requirements and will only be required to file with the NFA, and distribute to fund investors, the annual report the Registered Fund is required to prepare and file pursuant to the SEC’s rules. Historically, the CFTC has mandated that CPOs and CTAs keep required records at their main business office. The books and records that a CPO must maintain for a pool include a detailed and itemized daily record of each commodity interest transaction, as well as copies of each confirmation of such transactions, all receipts and disbursements, a participant ledger, and other relevant records.