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NATIONAL FUTURES ASSOCIATION CPO/CTA REGULATION SEMINAR DISCLOSURE DOCUMENT AND PERFORMANCE REPORTING MARCH 2, 2010

NATIONAL FUTURES ASSOCIATION CPO/CTA REGULATION SEMINAR DISCLOSURE DOCUMENT AND PERFORMANCE REPORTING MARCH 2, 2010. David M. Matteson Drinker Biddle & Reath Chicago Office. Disclosure Document - Goals. Comply with CFTC Part 4 rules Get document cleared by NFA in order to solicit clients

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NATIONAL FUTURES ASSOCIATION CPO/CTA REGULATION SEMINAR DISCLOSURE DOCUMENT AND PERFORMANCE REPORTING MARCH 2, 2010

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  1. NATIONAL FUTURES ASSOCIATION CPO/CTA REGULATION SEMINARDISCLOSURE DOCUMENT AND PERFORMANCE REPORTINGMARCH 2, 2010 David M. Matteson Drinker Biddle & Reath Chicago Office

  2. Disclosure Document - Goals • Comply with CFTC Part 4 rules • Get document cleared by NFA in order to solicit clients • Provide important disclosures to investors to protect CPO/CTA from anti-fraud liability

  3. Common Deficiencies • Unclear fee descriptions • Timing of management fees (beginning of period or arrears) • Incentive fee (trading profits or NAV; interest income; treatment of P&L for notional value) • Business background and biographies – must coincide exactly with BASIC • FCM litigation • Performance capsules (discussed later)

  4. Timing • Disclosure document goes stale every 9 months • Allow sufficient time for NFA review and multiple filings • Leaving insufficient time could disrupt ability to solicit • Material changes also trigger obligation to amend and re-file

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