After December 31, 2012, the Commodity Futures Trading Commission (the “CFTC”) will no longer exempt managers of “pools” under Rule 4.13(a)(4) from registration as “commodity pool advisors” (“CPOs”). Consequently, managers of hedge funds (and other private investment funds) that trade commodity interests, including swaps regulated by the CFTC, should be focused on either satisfying the requirements of another exemption (such as the “de minimis” exemption provided under CFTC Rule 4.13(a)(3)) or registering as a CPO and building the appropriate compliance infrastructure. Managers that determine to register will want to start now to identify ways to reduce the regulatory impact, such as qualifying for the lighter regulatory burden available under CFTC Rule 4.7.
Pryor Cashman partner Bertrand Fry, co-head of the firm’s Investment Management Group, counsel Michael Campoli and associate Meghan Dwyer wrote an informative legal update, entitled Last Chance to Prepare for End-of-Year Changes in the CFTC’s Regulation of Private Investment Funds, discussing certain elements of the CFTC’s regulations applicable to private investment funds.
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