On Tuesday, June 25, 2013, a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit (Court of Appeals) affirmed the decision of the United States District Court for the District of Columbia (District Court) to dismiss a joint lawsuit of the Investment Company Institute (ICI) and the U.S. Chamber of Commerce (Chamber) against the Commodity Futures Trading Commission (CFTC). The ICI and Chamber lawsuit alleged that the CFTC violated the Administrative Procedure Act (APA) by adopting amendments, in February 2012, to narrow the scope of relief from registration as a commodity pool operator (CPO) that is afforded to advisers to registered investment companies by CFTC Rule 4.5. In dismissing the lawsuit brought by the ICI and the Chamber, the Court of Appeals upheld the District Court’s finding that the CFTC’s amendments to Rule 4.5 were not arbitrary and capricious. The Court of Appeals’ decision is available here.

Advisers to registered investment companies not meeting the narrowed conditions for exclusion from CPO registration under CFTC Rule 4.5 were required to register as CPOs as of January 1, 2013. However, such advisers have largely been exempt from compliance obligations for registered CPOs pending final CFTC rules that are intended to harmonize CFTC and Securities and Exchange Commission (SEC) requirements relating to, among other things, investor disclosure, reporting and recordkeeping. Advisers to registered investment companies that have registered as CPOs will likely have to begin complying with the applicable CPO compliance obligations later this year once the final harmonization rules are issued and become effective.