Private funds that are subject to regulation by the SEC may also constitute commodity pools within the meaning of the Commodity Exchange Act, which may subject them and their advisers to regulation by the CFTC. See “Do You Need to Be a Registered Commodity Pool Operator Now and What Does It Mean If You Do? (Part Two of Two)
,” Hedge Fund Law Report, Vol. 5, No. 19 (May 10, 2012). In accordance with the JOBS Act, the SEC issued new rules that lift the ban on general solicitation and general advertising by private fund sponsors under certain conditions. See “A Compilation of Important Insights from Leading Law Firm Memoranda on the Implications of the JOBS Act Rulemaking for Hedge Fund Managers
,” Hedge Fund Law Report, Vol. 6, No. 30 (Aug. 1, 2013). The CFTC did not follow suit, leaving managers of funds that trade in commodities in a bind, because general solicitation and general advertising render commodity pool operators ineligible for certain important exemptions from CFTC rules. See “Schulte, Cleary and MoFo Partners Discuss How the Final and Proposed JOBS Act Rules Will Impact Hedge Fund Managers and Their Funds
,” Hedge Fund Law Report, Vol. 6, No. 29 (Jul. 25, 2013). Specifically, CFTC Regulation 4.7(b) provides registered commodity pool operators with relief from certain disclosure, reporting and recordkeeping requirements; and Regulation 4.13(a)(3) contains an exemption from registration as a commodity pool operator. However, both regulations contain requirements that are inconsistent with the lifting of the ban on general solicitation and general advertising reflected in new SEC Rules 506(c) and 144A. On September 9, 2014, the CFTC’s Division of Swap Dealer and Intermediary Oversight issued exemptive relief to bring Regulations 4.7(b) and 4.13(a)(3) into line with those new SEC Rules. This article summarizes the existing regulatory lay of the land and the key provisions of the relief.