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Legal Risk Management Tip for the Month – Commodity Investments for Advisors and Investment Companies

Jacko Law Group, PC (JLG) is very proud to present our new Legal
Risk Management Tip for the month of March, authored by JLG’s
recent addition to the legal team, Charles H. Field, Esq. Mr. Field
has over 26 years of experience working with business leaders and
senior executives on matters affecting investment advisors (IAs),
broker-dealers (BDs) and private funds. His extensive knowledge of
this field lends itself to our March Legal Tip, where Mr. Field
details the intricacies, definitions, exemptions and impacts of
commodity investments.

Commodity interests, Mr. Field explains, have “not always been
straight forward.” The Commodity Exchange Act (CEA) first defined a
commodity as “any item included on an enumerated list” of a wide
variety of “goods,” according to Field. But once the CEA was
transferred to The Commodities Futures Trading Commission (CFTC),
the definition of a commodity changed. These changing definitions
to commodities and their associated financial terminology –
particularly “commodity pool operators” (CPOs) and “commodity
trading advisors” (CTAs) – were further complicated by the 2010
Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank), which expanded and revised these definitions, in the
words of Field, “with the overall effect of capturing ‘trading’ in
security futures products and swaps.” In this Legal Tip article,
Field updates terms like “commodity pool,” “commodity pool
operator” and “commodity trading advisor” with current definitions,
and details the registration requirements and the exemptions that
apply to CPOs and CTAs, including Rule 4.13 (a)(3), Rule 4.5, Rule
4.14 and Rule 4.7.

JLG’s Legal Risk Management Tips are concise, original articles
written by our professional legal staff and posted at the end of
each month. They serve as timely, in-depth analyses on the
regulations, rules and provisions that impact the legal concerns of
businesses. Stay up-to-date each month on the latest in legal and
financial news affecting the securities industry with our Newsroom

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