02.29.2012
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Updates
CFTC Adopts and Proposes New Regulation of Commodity Pool Operators
On Friday February 24, 2012, the Commodity Futures Trading Commission both adopted and proposed new regulations aimed at harmonizing the compliance obligations of investment companies required to register as Commodity Pool Operators ("CPOs") pursuant to the Commodities Exchange Act. The newly adopted final rules both amend the existing CFTC part 4 regulations and add a new rule regarding CPOs and Commodity Trading Advisors ("CTAs").
The newly adopted rule adds data collection requirements for CPOs and CTAs that are consistent with the data collection required of entities registered with both the CFTC and the Securities and Exchange Commission (the "SEC") under Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the " Dodd-Frank Act"). The adopted amendments rescind certain exemptions from registration and add a certification requirement to the annual reports of operators of certain pools offered only to qualified eligible persons. The adopted amendments also include new risk disclosure requirements for CPOs and CTAs regarding swap transactions and require the annual filing of notices claiming exemptive relief under several CFTC's regulations.
The proposed CFTC regulation would amend existing rules applicable to investment companies registered under the Investment Company Act of 1940 whose advisors will be subject to registration as CPOs due to the newly adopted regulation.
CFTC and SEC Jointly Propose Identity Theft Related Rules
On Tuesday February 28, 2012, the CFTC and the SEC today jointly announced proposed rules requiring that broker-dealers, mutual funds, and other SEC-regulated entities create identity theft prevention programs pursuant to Section 1088 of the Dodd-Frank Act. Section 1088 transferred authority over certain parts of the Fair Credit Reporting Act from the Federal Trade Commission (the "FTC") to the SEC and CFTC for entities they regulate. The proposed rules are substantially similar to rules adopted in 2007 by the FTC and other federal financial regulatory agencies that were previously required to adopt such rules.
The regulation would require that SEC and CFTC regulated entities adopt a written identity theft programs that would include reasonable policies and procedures to identify relevant red flags, detect the occurrence of red flags, respond appropriately to the detected red flags, and periodically update the program. The proposed rules include guidelines and examples of red flags to help firms administer their programs.
© 2012 Perkins Coie LLP
