CFTC Grants Exemptive Relief to CPOs from Annual Reporting and Auditing Requirements

The CFTC Division of Swap Dealer and Intermediary Oversight ("DSIO") issued nine Exemption Letters granting relief to three commodity pool operators ("CPOs") from the annual report requirement in CFTC Rule 4.7(b)(3), and to six others from the audit requirements of CFTC Rule 4.22(d) regarding financial statements in their pools' 2015 annual reports. In CFTC Letters 16-13, 16-14 and 16-15, the DSIO granted relief to three CPOs operating pursuant to an exemption under Rule 4.7 from the annual report requirement in Rule 4.7(b)(3) to allow each of them instead to file reports that aligned more closely with the period of their initial operations or with the close of their initial fiscal year: in the case of Letters 16-13 and 16-14, a 17-month annual report and, in the case of Letter 16-15, a 13-month annual report.

In CFTC Letters 16-16, 16-17, 16-18, 16-19 and 16-20, the DSIO granted exemptive relief from annual audit requirements under CFTC Rules 4.7(b)(3) and 4.22(d)(1) to five CPOs, many of which were CPOs of already exempt commodity pools (CFTC Letters 16-16, 16-17 and 16-18). In CFTC Letter 16-21, the DSIO granted relief from the audit requirement to additional proprietary commodity pools operated by a CPO.

Among reasons cited by the DSIO for granting audit relief was the fact that (i) the respective pools had two or fewer participants at the end of the 2015 fiscal year, one of whom was the controlling member, principal or owner of the CPO/Commodity Trading Advisor (CFTC Letters 16-16, 16-17 and 16-18) or (ii) the investors in such pools had waived their right to receive audited financial statements in the fiscal year 2015 report for the applicable Series (CFTC Letters 16-19 and 16-20).

In every case, the relief was subject to compliance with specified conditions.