17 C.F.R. § 4.10

Definitions

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For purposes of this part:

(a) [Reserved]

(b) Net asset value means total assets minus total liabilities, determined in accord with generally accepted accounting principles, with each position in a commodity interest accounted for at fair market value.

(d)(1) Pool means any investment trust, syndicate or similar form of enterprise operated for the purpose of trading commodity interests.

(2) Multi-advisor pool means a pool in which:

(i) No commodity trading advisor is allocated or intended to be allocated more than twenty-five percent of the pool's funds available for commodity interest trading; and

(ii) No investee pool is allocated or intended to be allocated more than twenty-five percent of the pool's net asset value.

(3) Principal-protected pool means a pool (commonly referred to as a “guaranteed pool”) that is designed to limit the loss of the initial investment of its participants.

(4) Investee pool means any pool in which another pool or account participates or invests, e.g., as a limited partner thereof.

(5) Major investee pool means, with respect to a pool, any investee pool that is allocated or intended to be allocated at least ten percent of the net asset value of the pool.

(e)(1) Principal, when referring to a person that is a principal of a particular entity, shall have the same meaning as the term “principal” under § 3.1(a) of this chapter.

(2) Trading principal means:

(i) With respect to a commodity pool operator, a principal who participates in making trading decisions for a pool, or who supervises, or has authority to allocate pool assets to, persons so engaged; and

(ii) With respect to a commodity trading advisor, a principal who participates in making trading decisions for the account of a client or who supervises or selects persons so engaged.

(f) Direct, as used in the context of trading commodity interest accounts, refers to agreements whereby a person is authorized to cause transactions to be effected for a client's commodity interest account without the client's specific authorization.

(g) Trading program refers to the program pursuant to which a person (1) directs a client's commodity interest account, or (2) guides the client's commodity interest trading by means of a systematic program that recommends specific transactions.

(h) Trading manager means, with respect to a pool, any person, other than the commodity pool operator of the pool, having sole or partial authority to allocate pool assets to commodity trading advisors or investee pools.

(i) Major commodity trading advisor means, with respect to a pool, any commodity trading advisor that is allocated or is intended to be allocated at least ten percent of the pool's funds available for commodity interest trading. For this purpose, the percentage allocation shall be the amount of funds allocated to the trading advisor by agreement with the commodity pool operator (or trading manager) on behalf of the pool, expressed as a percentage of the lesser of the aggregate value of the assets allocated to the pool's trading advisors or the net assets of the pool at the time of allocation.

(j) Break-even point—(1) Means the trading profit that a pool must realize in the first year of a participant's investment to equal all fees and expenses such that such participant will recoup its initial investment, as calculated pursuant to rules promulgated by a registered futures association pursuant to section 17(j) of the Act; and

(2) Must be expressed both as a dollar amount and as a percentage of the minimum unit of initial investment and assume redemption of the initial investment at the end of the first year of investment.

(k) Draw-down means losses experienced by a pool or account over a specified period.

(l) Worst peak-to-valley draw-down means the greatest cumulative percentage decline in month-end net asset value due to losses sustained by a pool, account or trading program during any period in which the initial month-end net asset value is not equaled or exceeded by a subsequent month-end net asset value. Such decline must be expressed as a percentage of the initial month-end net asset value, together with an indication of the months and year(s) of such decline from the initial month-end net asset value to the lowest month-end net asset value of such decline. 1 For purposes of §§ 4.25 and 4.35, a peak-to-valley draw-down which began prior to the beginning of the most recent five calendar years is deemed to have occurred during such five- calendar-year period.

1 For example, a worst peak-to-valley draw-down of “4 to 8-92/25%” means that the peak-to-valley draw-down lasted from April to August of 1992 and resulted in a twenty-five percent cumulative draw-down.

(m) Partially-funded account means a client participation in the program of a commodity trading advisor in which the amount of funds in the client's commodity interest account over which such commodity trading advisor has trading authority is less than the account size that establishes the client's level of trading in a commodity trading advisor's program.

[46 FR 26013, May 9, 1981, as amended at 49 FR 8225, Mar. 5, 1984; 60 FR 38182, July 25, 1995; 66 FR 53522, Oct. 23, 2001; 68 FR 42967, July 21, 2003; 72 FR 63979, Nov. 14, 2007]

Notes of Decisions

Cited in 11 cases, 1986–2016 · leading case: Commodity Futures Trading Comm'n v. Equity Fin. Grp. LLC, 572 F.3d 150 (3rd Cir. 2009).

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Commodity Futures Trading Comm'n v. Equity Fin. Grp. LLC, 572 F.3d 150 (3rd Cir. 2009). · cites it 2× “” 17 C.F.R. § 4.10 (d)(1). This regulation is not the basis for the agency’s action in this case, and accordingly is not at issue in this appeal.”

In Re Amaranth Nat. Gas Commodities Litig., 587 F. Supp. 2d 513 (S.D.N.Y. 2008). “44 (citing 17 C.F.R. § 4.10 (d)(1)). Plaintiffs misunderstand the applicable law.”

United States v. Steven Sawyer, Harvey M. Bloch, Allen C. Leavitt, 799 F.2d 1494 (11th Cir. 1986). “” 17 C.F.R. § 4.10 (e)(1). Sawyer would fit either definition.”

Sec. & Exch. Comm'n v. Unique Fin. Concepts, Inc., 196 F.3d 1195 (11th Cir. 1999). “” 17 C.F.R. § 4.10 (d)(1) (1998). This definition encapsulates Appellants’ investor scheme.”

766347 Ontario Ltd. v. Zurich Capital Markets, Inc., 274 F. Supp. 2d 926 (N.D. Ill. 2003). · cites it 2× “” 17 C.F.R. § 4.10 (e)(l)(i) (incorporating 17 CFR § 3.”

766347 Ontario Ltd. v. Zurich Capital Markets Inc., 249 F. Supp. 2d 974 (N.D. Ill. 2003). “” 17 C.F.R. § 4.10 (d)(1). Plaintiffs argue that Asset Allocation’s offering documents constituted disclosure documents and therefore had to comply with the CEA.”

Stevenson v. J.C. Bradford & Co. (In Re Cannon), 230 B.R. 546 (Bankr. W.D. Tenn. 1999). “See also 17 C.F.R. § 4.10 (k) & (/). 12 . Had Ross and Norman been registered as CTAs, their lack of experience would have to be highlighted in the disclosure documents given to their customers.”

Howard Fam. Charitable Found., Inc. v. Trimble, 2011 OK CIV APP 85 (Okla. Civ. App. 2011). “§§ 4 b and 40, finding only administrative procedures were available. e.g., Johnson v. Chilcott, 590 F.”

U.S. Commodity Futures Trading Comm'n v. Hall, 632 F. App'x 111 (4th Cir. 2015). “” 17 C.F.R. § 4.10 (f) (2015). Hall admitted that his website offered “managed accounts” or “auto trade accounts,” and the evidence included correspondence he sent to his managed account holders that indicated that Hall’s clients gave him general authorization to trade according…”

SEC v. Unique Fin. Concepts, 196 F.3d 1195 (11th Cir. 1999). “” 17 C.F.R. § 4.10 (d)(1) (1998). This definition encapsulates Appellants’ investor scheme.”

Donald Burdick v. Rosenthal Collins Grp., Llc (Wash. Ct. App. 2016). “" 17 C.F.R. § 4.10 (d)(1). Essentially, it is the futures industry-equivalent ofa mutual fund.”

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