17 C.F.R. § 4.31

Required delivery of Disclosure Document to prospective clients

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(a) Each commodity trading advisor registered or required to be registered under the Act must deliver or cause to be delivered to a prospective client a Disclosure Document containing the information set forth in §§ 4.34 and 4.35 for the trading program pursuant to which the trading advisor seeks to direct the client's commodity interest account or to guide the client's commodity interest trading by means of a systematic program that recommends specific transactions by no later than the time the trading advisor delivers to the prospective client an advisory agreement to direct or guide the client's account; Provided, That any information distributed in advance of the delivery of the Disclosure Document to a prospective client is consistent with or amended by the information contained in the Disclosure Document and with the obligations of the commodity trading advisor under the Act, the Commission's regulations issued thereunder, and the laws of any other applicable federal or state authority; Provided further, That in the event such previously distributed information is amended by the Disclosure Document in any material respect, the prospective participant must be in receipt of the Disclosure Document at least 48 hours prior to the advisory agreement being accepted by the trading advisor.

(b) The commodity trading advisor may not enter into an agreement with a prospective client to direct the client's commodity interest account or to guide the client's commodity interest trading unless the trading advisor first receives from the prospective client an acknowledgment signed and dated by the prospective client stating that the client received a Disclosure Document for the trading program pursuant to which the trading advisor will direct his account or will guide his trading. Where a Disclosure Document is delivered to a prospective client by electronic means, in lieu of a manually signed and dated acknowledgment the trading advisor may establish receipt by electronic means that use a unique identifier to confirm the identity of the recipient of such Disclosure Document, Provided, however, That the requirement of § 4.33(a)(2) to retain the acknowledgment specified in this paragraph (b) applies equally to such substitute evidence of receipt, which must be retained either in hard copy form or in another form approved by the Commission.

[60 FR 38189, July 25, 1995, as amended at 62 FR 39115, July 22, 1997; 68 FR 47235, Aug. 8, 2003; 68 FR 59114, Oct. 14, 2003]

Notes of Decisions

Cited in 6 cases (3 in the last 5 years), 1982–2024 · leading case: Stevenson v. J.C. Bradford & Co. (In Re Cannon), 230 B.R. 546 (Bankr. W.D. Tenn. 1999).

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Stevenson v. J.C. Bradford & Co. (In Re Cannon), 230 B.R. 546 (Bankr. W.D. Tenn. 1999). · cites it 2× “A CTA must provide customers with a Disclosure Document, filed with the CFTC, which, inter alia, provides information which prospective clients may use to evaluate the trading skills of the CTA, and its principals, performance records, if any, for the preceding three years, and…”

W & W Farms, Inc. v. Chartered Sys., Etc., 542 F. Supp. 56 (N.D. Ind. 1982). · cites it 2× “55 and 17 C.F.R. § 4.31 ; failed to inform plaintiff of all fees and other charges as required by 17 C.”

New York Currency Rsch. Corp. v. Commodity Futures Trading Comm'n, 180 F.3d 83 (2d Cir. 1999). “The provision at issue in Wichman , 17 C.F.R. § 4.31 (a), read: “No commodity trading advisor registered or required to be registered .”

CFTC v. James Donelson, 115 F.4th 791 (7th Cir. 2024). · cites it 3× “§ 6m(1); and failure to make the disclosures required of some CTAs, 17 C.F.R. §§ 4.31 (a), (b) & 4.36(d)(1). To resolve these four claims, we must answer the question whether Long Leaf was a CTA.”

Commodity Futures Trading Comm'n v. Long Leaf Trading Grp., Inc. (N.D. Ill. 2022). · cites it 2× “Failure to Make Required CTA Disclosures Count V asserts that Long Leaf failed to make certain disclosures as required by 17 C.F.R. §§ 4.31 (a), (b), and 4.36(d)(1), and seeks to hold Donelson liable as the controlling person.”

Commodity Futures Trading Comm'n v. Fintech Inv. Grp., Inc. (M.D. Fla. 2021). “53-28 at 2); see also 17 C.F.R. § 4.31 (requiring CTAs to provide to a prospective client a disclosure document before entering into an agreement to direct or guide the client’s commodity interest account).”

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