CFTC sued over commodity-pool operators rule for advisers

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April 17 (Bloomberg) -- The Commodity Futures Trading Commission was sued over a new rule requiring advisers to mutual funds and other investment companies to register as commodity pool operators under certain conditions.

The rule is burdensome and unnecessary, the U.S. Chamber of Commerce and the Investment Company Institute said in the lawsuit filed today in federal court in Washington. The commission voted 4-1 to approve the rule, it said Feb. 9.

The rule rescinds exemptions, first enacted in 2003, from CFTC registration for mutual funds that use futures and swaps tied to commodities. The National Futures Association, a Chicago-based nonprofit regulator financed by the industry, sought the change to improve protection of retail investors.

“This new rule is in fact significantly more restrictive than the regime the commission rejected in 2003, as it requires, for the first time, registration of certain advisers to investment companies on the basis of their trading in swaps or marketing the investment company as a vehicle for trading in the swaps markets,” the plaintiffs said in the complaint.

R. David Gary, a spokesman for the CFTC, didn’t immediately return a voice-mail message seeking comment on the lawsuit. The ICI and the Chamber of Commerce scheduled a news conference for 1 p.m. Washington time to discuss the complaint.

The case is Investment Company Institute v. U.S. Commodity Futures Trading Commission, 1:12-cv-00612, U.S. District Court, District of Columbia.

Bloomberg News

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