Co-authored by Kathleen H. Moriarty and Gregory E. Xethalis.

Under amended Commodity Futures Trading Commission Regulation 4.5, registered investment advisers (RIAs) to registered investment companies engaging in more than minimal commodity trading activities will be required to register as commodity pool operators (CPOs) and become members of the National Futures Association (NFA). NFA Bylaw 1101 requires that CPOs determine if any participants in their commodity pools are required to be registered with the NFA.

Until further notice, the NFA has determined that CPOs to investment companies will not be required to perform due diligence on pool participants (i.e., fund shareholders) pursuant to NFA Bylaw 1101. These CPOs still need to fulfill their Bylaw 1101 obligations to ensure that any futures commissions merchant through which they transact commodity transactions and any sub-adviser to their investment company is properly registered in the appropriate capacity and is a member of the NFA, or is exempted from commodity trading adviser registration. The NFA is to provide additional guidance regarding due diligence obligations under NFA Bylaw 1101 that will eventually supersede the current interpretation of Bylaw 1101.

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Photo of Kelly Dankbar Kelly Dankbar

Kelly is a shareholder in the firm’s Estate Planning, Tax and Fiduciary Abuse and Litigation groups. Kelly was admitted to the State Bar of California in 1996, after receiving her J.D. from McGeorge School of Law, University of the Pacific, in December of…

Kelly is a shareholder in the firm’s Estate Planning, Tax and Fiduciary Abuse and Litigation groups. Kelly was admitted to the State Bar of California in 1996, after receiving her J.D. from McGeorge School of Law, University of the Pacific, in December of 1995. Kelly focuses her practice on estate and trust litigation, financial/fiduciary abuse, elder financial abuse, trust and probate administration, and conservatorships. Kelly also has extensive trial, mediation and appellate experience, and has successfully litigated a number of high profile trust disputes and elder financial abuse cases.