CFTC Issues No-Action Letter for Operators of Investment Pools that Invest in Legacy Securitization Vehicles (with Lofchie Comment)

The CFTC Division of Swap Dealer and Intermediary Oversight ("DSIO") today issued a letter providing that the Division will not recommend that the CFTC take enforcement action against the CPOs of investment pools that invest in securitization vehicles that comply with the terms of the no-action relief set forth in the 12-45 letter.

Lofchie Comment: The issue arose because in Letter 12-45, the CFTC had provided that the operators of certain securitization vehicles were not required to register as CPOs, but maintained that the vehicles were themselves pools. While this approach was acceptable as to the direct operators of the vehicles, it meant that funds that invested in the vehicles had to treat their investments as being in a pool--with the ironic result that the managers of the investing firm might be treated as a pool as to which they were required to register as CPOs, even though the vehicle into which they had invested was not regulated as a pool. This no-action letter corrects that illogic.

See: CFTC Letter 12-67: Parts 3 and 4 of the Commission's Regulations; No-Action.Related news item: CFTC Staff Expands Existing Relief as to Securitizations (with Lofchie Comment).