National Futures Association (“NFA”) Compliance Rule 2-29 and its related Interpretive Notice require, among other things, that past performance used in promotional material be presented net of all commissions, fees and expenses.

The NFA recently amended these requirements to allow commodity trading advisors (“CTAs”) that are also SEC registered investment advisers to present past performance to eligible contract participants (“ECP”) on a gross basis in non-public, one-on-one presentations. To rely on this limited exception, a CTA must:

1. Provide the recipient with written disclosure that the performance results are presented on a gross basis and do not reflect the deduction of fees and expenses, which will reduce the recipient’s returns; and
2. Offer to provide the recipient with the performance results net of any fees and expenses agreed upon by the CTA and the recipient.

If you have any questions regarding the foregoing, please contact any of the partners or counsel listed below or your primary attorney in Seward & Kissel’s Investment Management Group.