Representative Angie Craig (D-MN) introduced a bill that would amend the CEA to exempt certain persons acting for or providing advice on CFTC-regulated products to charitable organizations from regulation as CPOs and CTAs.
If enacted into law, the bill would exempt from regulation as CPOs or CTAs the directors, officers or employees of (i) a charitable organization or (ii) an investment entity excluded from regulation under the Investment Company Act by ICA Section 3(c)(10) as a charitable organization or church plan. The amendment would bring the treatment of charitable organizations under the CEA in line with their historical treatment under the Investment Company Act.
The CFTC's historically broad interpretation of the term "commodity pool" results in its application to any two entities that combine investment resources, but that are not truly commodity pools, e.g., family offices and other family investment vehicles, various forms of special purpose vehicles, non-profit organizations, financial management vehicles and endowments of universities, limited partnerships, trusts, internal corporate investment vehicles, certain insurance company accounts, real estate investment trusts, most securitization vehicles, closely held and business partner pools, and the like. Currently, no-action relief or regulatory guidance is required--often on an individualized basis--for those who operate or advise such entities to avoid being regulated as CPOs or CTAs.
Rep. Craig's bill seeks to do away with the need for certain charitable organizations to petition the CFTC for relief when a broad application of the rules makes no sense. Ideally, this concept could be further expanded to include other situations that are seemingly outside the policy scope of the CFTC regulation of CPOs, and whose inclusion within the "commodity pool" definition may be something of a needless drain on industry resources.
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