[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR4.12]

[Page 173-175]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS--Table of Contents
 
        Subpart A--General Provisions, Definitions and Exemptions
 
Sec. 4.12  Exemption from provisions of part 4.

    (a) In general. (1) The Commission may exempt any person or any 
class or classes of persons from any provision of this part 4 if it 
finds that the exemption is not contrary to the public interest and the 
purposes of the provisions from which the exemption is sought.
    (2) The Commission may grant the exemption subject to such terms and 
conditions as it may find appropriate.
    (b) Exemption from subpart B for certain commodity pool operators. 
(1) Any person who is registered as a commodity pool operator, or has 
applied for such registration, may claim any or all of the relief 
available under paragraph (b)(2) of this section if:
    (i) The pool for which it makes such claim:
    (A) Will be offered and sold pursuant to the Securities Act of 1933 
or pursuant to an exemption from said Act;
    (B) Will generally and routinely engage in the buying and selling of 
securities and securities derived instruments;
    (C) Will not enter into commodity futures and commodity options 
contracts for which the aggregate initial margin and premiums exceed 10 
percent of the fair market value of the pool's assets, after taking into 
account unrealized profits and unrealized losses on any such contracts 
it has entered into; Provided, however, That in the case of an option 
that is in-the-money at the time of purchase, the in-the-money amount as 
defined in Sec. 190.01(x) may be excluded in computing such 10 percent; 
and
    (D) Will trade such commodity interests in a manner solely 
incidental to its securities trading activities.
    (ii) Each existing participant and prospective participant in the 
pool for which it makes such request is informed in writing of the 
restrictions set forth in paragraph (b)(1)(i) (C) and (D) of this 
section prior to the date the

[[Page 174]]

pool commences trading commodity interests. The pool operator may 
furnish this information by way of the pool's Disclosure Document, 
Account Statement, a separate notice or other similar means.
    (2) The commodity pool operator of a pool which meets the criteria 
of paragraph (b)(1) of this section may claim the following relief:
    (i) In the case of Sec. 4.21, that the Commission accept in lieu and 
in satisfaction of the Disclosure Document specified by that section an 
offering memorandum for the pool which does not contain the information 
required by Secs. 4.24(a), 4.24(b), and 4.24(n); Provided, however, that 
the offering memorandum:
    (A) Is prepared pursuant to the requirements of the Securities Act 
of 1933, as amended, or the exemption from said Act pursuant to which 
the pool is being offered and sold;
    (B) Contains the information required by Secs. 4.24(c) through (m) 
and (o) through (u); and
    (C) Complies with the requirements of Secs. 4.24(v) and (w).
    (ii) In the case of Sec. 4.22 (a) and (b), that the Commission 
accept in lieu and in satisfaction of the Account Statement and 
prescribed frequency respectively specified by those sections a 
statement which indicates the net asset value of the pool as of the end 
of the reporting period and the change in net asset value from the end 
of the previous reporting period, to be prepared and distributed no less 
frequently than quarterly; Provided, however, That each such statement 
complies with the other requirements of Sec. 4.22 (a) and (b), including 
the references in those sections to Sec. 4.22 (g) and (h).
    (iii) In the case of Sec. 4.22 (c) through (e), that the Commission 
accept in lieu and in satisfaction of the financial information and 
statements in the Annual Report specified by those sections an annual 
report for the pool which contains, at a minimum, a Statement of 
Financial Condition as of the close of the pool's fiscal year and a 
Statement of Income (Loss) for that year; Provided, however, That:
    (A) Each such annual report complies with the other requirements of 
Sec. 4.22(c), including the reference in that section to Sec. 4.22(h) 
and the requirement in Sec. 4.22(c)(5) that the annual report must 
contain appropriate footnote disclosure and further material 
information; and
    (B) The financial statements in such annual report must be presented 
and computed in accordance with generally accepted accounting principles 
consistently applied and must be certified by an independent public 
accountant.
    (iv) In the case of Sec. 4.23(a) (10) and (11), to exempt the pool 
operator from the requirements of those sections with respect to the 
pool.
    (3) Any registered commodity pool operator who desires to claim the 
relief available under this Sec. 4.12(b) must file a claim of exemption 
with the Commission. Such claim must:
    (i) Be in writing;
    (ii) Provide the name, main business address and main business 
telephone number of the registered commodity pool operator, or applicant 
for such registration, making the request;
    (iii) Provide the name of the commodity pool for which the request 
is being made;
    (iv) Contain representations that the pool will be operated in 
compliance with paragraph (b)(1)(i) of this section and the pool 
operator will comply with the requirements of paragraph (b)(1)(ii) of 
this section;
    (v) Specify the relief sought under paragraph (b)(2) of this 
section;
    (vi) Be signed by the pool operator, as follows: If the pool 
operator is a sole proprietorship, the request must be signed by the 
sole proprietor; if a partnership, by a general partner; and if a 
corporation, by the chief executive officer or chief financial officer; 
and
    (vii) Be filed, along with a copy, with the Commission at the 
address specified in Sec. 4.2.
    (viii) A copy also must be filed with the National Futures 
Association at its headquarters office (Attn: Director of Compliance, 
Compliance Department).
    (4)(i) The claim of exemption must be filed before the date the 
commodity pool first enters into a commodity interest transaction.
    (ii) The claim of exemption shall be effective upon filing; 
Provided, however, That any exemption claimed hereunder shall cease to 
be effective upon any

[[Page 175]]

change which would render the representations made pursuant to paragraph 
(b)(3)(iv) of this section inaccurate or the continuation of such 
representations false or misleading.
    (5)(i) If a claim of exemption has been made under 
Sec. 4.12(b)(2)(i), the commodity pool operator must make a statement to 
that effect on the cover page of each offering memorandum, or amendment 
thereto, that it is required to file with the Commission pursuant to 
Sec. 4.26.
    (ii) If a claim of exemption has been made with respect to paragraph 
(b)(2)(iii) of this section, the pool operator must make a statement to 
that effect on the cover page of each annual report that it is required 
to file with the Commission pursuant to Sec. 4.22(c).
    (6)(i) Any claim of exemption effective hereunder shall be effective 
only with respect to the pool for which it has been made.
    (ii) The effectiveness of such claim shall not affect the 
obligations of the commodity pool operator to comply with all other 
applicable provisions of this part 4, the Act and the Commission's rules 
and regulations issued thereunder with respect to the pool and any other 
pool the pool operator operates or intends to operate.

[52 FR 41984, Nov. 2, 1987, as amended at 60 FR 38183, July 25, 1995]