Practical Guidance for Hedge Fund Managers on Preparing for and Handling NFA Audits

A hedge fund manager may be subject to CFTC jurisdiction and registration as a commodity pool operator (CPO) or commodity trading adviser (CTA) if it uses derivatives or trades in commodities. CFTC-registered CPOs and CTAs are required to become members of the National Futures Association (NFA) and, as such, are subject to NFA rules and regulations and to periodic audits. This article highlights the key points raised by a panel that reviewed the nuts and bolts of an NFA audit, NFA compliance programs and common audit issues; offered strategies for preparing for and surviving an audit; and summarized recent CFTC guidance that affects CPOs and CTAs. See “NFA Workshop Details the Registration and Regulatory Obligations of Hedge Fund Managers That Trade Commodity Interests” (Dec. 13, 2012); and our two-part series “Do You Need to Be a Registered Commodity Pool Operator Now and What Does It Mean If You Do”: Part One (Feb. 23, 2012); and Part Two (May 10, 2012).

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