Tag Archives: cta expo 2010

CTA Expo 2010 | November 3, 2010

Bart Mallon Speaking at Chicago CTA buy anabolic steroids Expo

This year’s Chicago CTA Expo will again be held the same week as the FIA Expo and it will be a day after the NIBA Sales and Marketing Conference.  Bart Mallon of Mallon P.C. will be a speaker at the event.  The full line up of speakers can be found below.

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CTA EXPO 2010, for the first time, had conferences in New York, April 21 and now Chicago, November 3.  CTA EXPO Chicago will continue to focus on the needs of the CTA community.

November 2, 2010

  • 4:30 – 6:00 – Joint NIBA/CTA EXPO Cocktail Party (Sponsored by Telvent DTN)

November 3, 2010

  • 8:00 – 9:00 – Continental Breakfast (Sponsored by DMAXX)
  • 8:45 – 9:00 – Welcoming Remarks (Sponsored by Barclay Hedge Ltd.)
    • Frank Pusateri (Adriondack Portfolio Management, Inc)
    • Bucky Isaacson (Future Funding Consultants)
  • 9:00 – 9:30 – Marketing in Europe (Sponsored by Horizon Cash Management, LLC)
    • Cecilia Mortimore (Credit-Suisse Securities (USA) LLC)
  • 9:30 – 10:00 – Institutional Marketing (Sponsored by Mallon P.C.)
    • Laurie Posner (PNC Capital Advisors)
  • 10:00 – 10:30 – Coffee Break (Sponsored by Firm 58)
  • 10:30 – 11:00Manager Selection and Portfolio Creation at a Fund of Funds (Sponsored by Ruddy Law Office, PLLC)
    • Speaker To Be Confirmed (The Kenmar Group)
  • 11:00 – 12:00Innovations in Investment Products and Marketing Exchange Traded Funds (Sponsored by Michael Coglianese CPA, PC)
    • Tim Pickering (Auspice Capital Advisors Ltd)
  • 11:00 – 12:00 – Product Structuring and Marketing to The Broker Dealer Community (Sponsored by Michael Coglianese CPA, PC)
    • Michael Tannenbaum (Tannenbaum Helpern Syracuse and Hirschtritt)
    • Others: To Be Confirmed
    • Moderator: Mark Omens (CME Group)
  • 12:00 – 12:45 – Lunch (Sponsored by ICE)
  • 12:45 – 1:30 – Keynote Speaker (Sponsored by Dorman Trading)
    • Suk Kim (Samsung Asset Management Company LTD)
  • 1:30 – 2:00Marketing Emerging CTAs (Sponsored by eSignal)
    • Brad Cole (Cole Partners)
  • 2:00 – 2:30Generate a Positive Impact with Your Marketing Materials (Sponsored by TraderView)
    • Kristin Fox (FoxInspires LLC)
  • 2:30 – 3:00 – Coffee Break
  • 3:00 – 3:30 – Internet Social Networking (Sponsored by Arthur Bell, Certified Public Accountants)
    • Bart Mallon (Mallon P.C.)
  • 3:30 – 4:00Internet Publishing and Marketing (Sponsored by CCS Financial Services, Inc.)
    • John Lothian (John Lothian Newsletter)
  • 4:00 – 4:30Managed Futures – Yesterday and Today (Sponsored by Woodfield Fund Administration LLC)
    • Leon and Joy Rose
  • 4:30 – 6:00Cocktail Party

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Other related hedge fund law articles:

Cole-Frieman & Mallon LLP provides CTA registration and compliance services.  Bart Mallon, Esq. can be reached directly at 415-868-5345.

CTA Regulatory and Compliance Discussion

By Bart Mallon, Esq. (www.colefrieman.com)

“Compliance in a Changing Environment”

As we are all well aware both the investing and the regulatory environments have experienced a dramatic refocusing on compliance and related issues in the wake of the 2008 meltdown and the Bernie Madoff affair.  This overview is for the CTA Expo 2009 program entitled Compliance in a Changing Environment.  The program was sponsored by Woodfield Fund Administration and featured Kate Dressel of Strategic Compliance Solutions as well as Patty Cushing of the National Futures Association.

Ms. Dressel announced that compliance and processes and procedures have become increasingly important, especially since investors are now concerned about fraud.  The best defense with regard to fraud, and an theme that pervaded this and other discussions, is that a CTA needs to have a reputable accountant and auditor.  Having reputable service providers (including administrators, auditors and legal firms) will help potential investors/clients to feel more comfortable with the CTA and the investment program.

Ms. Cushing, who is the associate director for Risk Management and Member Education at the NFA, began by emphasizing that CTA performance information needs to be accurate.  She also mentioned that CTAs really need to be focused on trading and the other business issues, especially accounting and legal, should be done by experienced people or service providers.  Ms. Cushing made reference to the NFA’s spreadsheet (although I could not find this on the NFA’s website) as well as an informative webscast by the NFA discussing CTA Performance Reporting webcast.  Basically she said that if you don’t want to spend the time making sure that all of the numbers are perfect, then you are going to need to use a consulting firm.

If you self administrer you are going to need to think about an outside administrator so that there will be increased oversight.

Ms. Dressel talked about the current industry buzzword – transparency.  Transparency is important, she went on, not just in trading but in all aspects of the CTA business.  Compliance and operations, especially, need well ordered and solid procedures in place.  Oversight is the key and it is very important that the principals are aware of everything that is going on in the firm.

[Note: Ms. Cushing talked about forex managers and noted that forex managers needed to make sure they were submitting their forex disclosure documents to the NFA for review.  I spoke with Ms. Cushing after the session was over to gain clarification over her statement and also discuss the forex registration rules which were supposed to be proposed by the CFTC some time ago.  For clarification, I want to point out that forex managers only need to have the NFA review their forex disclosure documents if they are already a member of the NFA – that is, if they are already registered as a CTA or CPO.  Forex only managers who are currently not registered with the NFA (and who trade only in the off-exchange spot markets) currently do not need to register with the NFA.  I discussed this with Ms. Cushing and asked if she had seen a draft of the registration rules or if she had heard anything from the CFTC as to when the rules might be proposed – she said that the CFTC has been working on the rules but that she has no idea when or if the rules will be proposed.  She seemed to be parroting the CFTC on this issue – the agency has told me a number of times that they are working on the rules and that they will be proposed shortly.]

Ms. Cushing mentioned that some CTA firms will actually use a previous NFA audit as a kind of “stamp of approval” by the regulatory agency.  Although the NFA audit is only designed for the NFA Member who was subject to the audit, some Members will send these to their clients.  Accoring to Ms. Cushing, the NFA is taking no opinion with regard to this practice.  She did note, however, that such reports might not be the best source of information regarding a firm’s procedures as it might be out of date.

Ms. Dressel mentioned that mock audits for CTAs are good to pursue – you can contact a number of outside firms like her own that can help a manager through a mock audit.  Not only does a mock audit help a firm for an actual NFA audit, but it will also help to identify operational issues which the manager can refocus upon.

One of the most important items that CTAs should be aware of is their marketing materials and disclosure documents.  It is imperative that CTA firms make sure that every statement in the disclosure documents and other marketing materials be true.  CTA firms should not try to stretch the truth – potential investors are check and there is a whole new paradigm.  Any stretched truth will be uncovered during the due diligence process which now includes, for some managers, phorensic accounting to make sure that trading parameters have been consistently adheared to.  Investors now need absolute confidence in who you are and what you do.

CTA firms should be vigilant about making sure they stick to the trading parameters in the disclosure documents.

A very good piece of advice is that if there is anything in your disclosure documents which is not true, you need to update your documents.  [BM note: and potentially discuss the change with your current investors/clients.]

Ms. Cushing noted that there a number of ways to that your firm can prepare for an NFA audit.  The first step is to read and be aware of the NFA’s yearly self-examination checklist.  [Note: if you do not know about the self-exam checklist, and if you do not have a compliance program in place, please see a CTA attorney or compliance person immediately to become compliant.  The self-exam checklist is a central part of a good compliance program.]  Ms. Cushing urged those firms who have questions about the checklist to call the NFA (although, in practice, this is usually an effort in futility as the staff will generally not ask questions and tell firms to consult with an attorney or other compliance professionals).

Questions From Audience

After this we had an opportunity to move onto questions from the attendees.  One comment came from Fred Gehm who has worked in due diligence for a fund of funds which allocated to the CTAs through separately managed accounts.  He made the statement that if the manager doesn’t have an external administrator the FOF will not allocate to that CTA – even if the CTA has audited returns.  He also made the comment that 10-15% of the time CTAs (or other managers) will lie to him and he will catch it.  Obviously in these cases the FOF does not allocate to such a group.  He said that many times if the manager had been honest about fact in the first place, it would likely have been something that would have been passed over but for the lied.

Ms. Cushing and Ms. Dressel emphasized that the CTA is ultimately responsible for making sure that the books and records are correct – even if there is an outside administrator, the CTA needs to take an active role in this area.

The next questioner noted that family offices and pensions are beginning to get involved in the CTA space and he wondered how smaller CTAs can set up structures to be well positioned for such investors.  Ms. Dressel suggested that the CTA manager get as much of the program together as possible – this means the manager should try to get the best administrators, auditors and legal counsel that they can afford.  The manager should also be able to completely answer a standard due diligence questionnaire – these questionnaires highlight some of the important structural and governance items that family offices and pensions will be focusing on.

Mr. Gehm mentioned that he is concerned with two central issues when allocating to small CTAs: (1) custody and (2) risk management.  With the first, custody, he said he was especially concerned with who signs the checks and where is the dollar control.  Fred recommended that CTAs have secondary signer for disbursements.  With regard to the second issue, risk management, he said he looked for a structure where someone with independent authority had authority with regard to this issue.  The key here is that the risk manager should have no fear of losing his job, that there is contractual safeguards for him doing his risk management.

There were a couple of other brief questions before the session ended.  One takeaway with regard to risk management is to think about things throughout the organization – key man provisions and plans for odd eventualities.  The more that a CTA manager really thinks about and understands the risk of his business, the better it will be for the investors and the more likely for the CTA manager to have an easier time raising capital.

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This article was first printed on the CTA Expo Blog.  This article was contributed by Bart Mallon, Esq. who runs the Hedge Fund Law Blog and is committed to providing useful and easy to understand information for CTAs and CPOs which can be found in our CTA and CPO Registration and Compliance Guide. For more information on CTA registration or compliance services please contact Bart Mallon, Esq. at 415-868-5345.

CTA and CPO Registration and Compliance Guide

Practical guidance for CTA and CPO firms

Commodity Trading Advisors (CTAs) and Commodity Pool Operators (CPOs) have been contacting me with greater regularity and we have decided to provide those firms with more detailed information on their registration and compliance requirements. Over the course of the next few weeks we will be continually updating this page with more legal and business guidance for CTAs and CPOs. Specifically, we will be providing information on the following topics:

CTA and CPO Registration – this article discusses the how-to’s of registration with the CFTC. The article details the general requirements for firms, principals, and associated persons. Included in this discussion is information on CTA/CPO exam requirements and an overview of the registration process through the NFA’s electronic registration system.

CTA and CPO Registration Exemptions – while the Commodities Exchange Act will generally require CTA and CPO firms to register with the CFTC, there are some important exemptions from the registration provisions. Review this article to see if your firm might be able to claim an exemption from the registration provisions.

CTA and CPO Compliance Overview – CTAs and CPOs are subject to a number of laws, regulations and rules. Not only must CTAs and CPOs follow CFTC laws and regulations, but as Members of the NFA, these groups must also follow all of the rules developed by the NFA. We will be discussing compliance best practices, major examination issues, major deadlines and the CTA/CPO compliance manual. Being prepared for an NFA examination is of great importance.

Recent NFA Actions against CTA and CPO Managers – the NFA and the CFTC have been quite active lately. In this article we will be discussing some of the most recent actions against NFA member firms. This article will also provide common-sense advice on what managers can do the protect themselves from examination deficiencies.

Important NFA Rules for CTA and CPO Firms – there are a number of rules which the NFA has regarding the conduct of CTAs and CPOs. In general CTAs and CPOs must hold themselves out with the utmost professionalism. This article will detail this and other important NFA rules.

CTA and CPO advertising – there are a number of important rules regarding advertising for CTAs and CPOs. CPOs, especially, must be careful about advertising because of the restrictions under Rule 506 of Regulation D, an exemption that many CPOs utilize in offering their fund interests. Websites will be touched upon in this post and will also be discussed in greater depth in a subsequent posting.

CTA and CPO websites – many CTA firms utilize the internet to advertise their services. CPO firms will also sometimes have a (minimal) internet presence. This article will detail the considerations that both CTA and CPO firms face when creating and maintaining an internet presence and how to deal with internet based inquiries from potential investors.

NFA Exam Requirements for CTAs and CPOs – individuals of NFA member firms will generally need to have a Series 3 exam license and potentially a Series 30 exam. Some individuals may need to have a Series 31 exam license and, potentially in the future, forex CTAs and CPOs will need to have a Series 34 exam license. This article will discuss these exams and the process an individual will go through in order to register to take the exams.

CTA Expo Blog – the unofficial blog of the CTA Expo most recently held in October of 2009.  Information for CTA managers on business, legal and compliance issues.  Included is a directory of CTA firms and service providers.

Forex CTAs and CPOs – the regulatory light has been focused on retail spot forex managers recently. Read this article to get up to speed on recent CFTC and NFA pronouncements regarding this area of the industry. We will also provide information on Forex IBs and Forex FCMs.

In addition to the above topics we are hoping to add others over time. We welcome all feedback and encourage you to leave comments below. We will also attempt to answer CTA and CPO frequently asked questions.

If you are a manager or firm that needs to register as a CTA or CPO, or if you are contemplating registration, please contact Bart Mallon, Esq. of Cole-Frieman & Mallon LLP at 415-868-5345.