401(k) Plans—Potential Commodity Pool Issues in the United States

by Dechert LLP

Under the rules of the Commodity Futures Trading Commission (“CFTC”), certain collective investment vehicles and other entities that, directly or indirectly, invest in “commodity interests”1 may be “commodity pools” whose sponsors or operators may be “commodity pool operators” (“CPOs”) subject to CFTC registration and regulation. “401(k)” and other similar retirement plans under which investments are made at the direction of participants and beneficiaries (“Participant-Directed Plans”) could, under certain circumstances, be considered to be commodity pools whose trustees, named or designated fiduciaries, or employer sponsors could be deemed to be CPOs subject to registration as such,2 unless (i) a notice of eligibility under CFTC Rule 4.5 is filed and then subsequently reaffirmed annually with the National Futures Association (“NFA”) claiming an exclusion from the definition of CPO and (ii) disclosure is made to plan participants and beneficiaries that such plan is being operated by a person claiming such exclusion. 

While a number of Participant-Directed Plans are the subject of exclusion notices that have been filed with the NFA by trustees, named or designated fiduciaries, or employers, many such plans – and indeed maybe the overwhelming majority of such plans – are not the subject of NFA exclusion filings. We have become aware that there recently has been increased concern by some that those in charge of Participant-Directed Plans should consider whether to file an NFA notice (and make related disclosure to plan participants and beneficiaries).

Dechert’s perspective regarding this matter is that, before any action is taken, the issue should be reviewed carefully and thoughtfully. In this regard, the specific facts and circumstances surrounding any particular Participant-Directed Plan may have a substantial impact on the applicable legal analysis. Further, there may be a variety of practical considerations that could factor into the approach that those in charge of Participant-Directed Plans may ultimately desire to take. 

Dechert would be pleased to discuss the manner in which we view these issues, and our extensive experience with how the issues are being analyzed and addressed in the market.


1. Commodity interests include: (i) exchange-traded futures contracts, options on futures contracts, and commodity options; (ii) security futures products; (iii) leveraged transactions; (iv) retail foreign currency contracts; (v) most exchange-traded and over-the-counter derivatives (such as swap, forward, and option contracts), other than swaps (including credit default swaps) referencing single securities or loans or baskets of nine or fewer securities (i.e., narrow-based security index), forward contracts on non-financial items, and certain limited currency swaps and forwards providing for physical delivery of two currencies; and (vi) indirect exposure to commodity interests through collective investment vehicles that themselves invest directly in commodity interests. 

2. A Participant-Directed Plan could, for example, indirectly invest in commodity interests by virtue of investing, at the direction of a participant or beneficiary, in a mutual fund or exchange-traded fund (or, possibly, in a hedge fund or private equity fund) which is itself a commodity pool. Other possibilities include more direct investment in commodity interests through a separately managed account made available as an investment option under the Participant-Directed Plan.



Written by:

Dechert LLP

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.