17 CFR §4.34

1. (a)Cautionary Statement. The following Cautionary Statement must be prominently displayed on the cover page of the Disclosure Document:
2. (b)Risk Disclosure Statement.
   1. (1)The following Risk Disclosure Statement must be prominently displayed immediately following any disclosures required to appear on the cover page of the Disclosure Document as provided by the Commission, by any applicable federal or state securities laws and regulations or by any applicable laws of non-United States jurisdictions:
   2. (2)
      1. (i)If the commodity trading advisor may trade foreign futures or options contracts pursuant to the offered trading program, the Risk Disclosure Statement must further state the following:
      2. (ii)If the commodity trading advisor may engage in retail forex transactions pursuant to the offered trading program, the Risk Disclosure Statement must further state the following:
   3. (3)If the commodity trading advisor is not also a registered futures commission merchant or a registered retail foreign exchange dealer, the trading advisor must make the additional following statement in the Risk Disclosure Statement, to be included as the last paragraph thereof:
   4. (4)If the commodity trading advisor may engage in swaps, the Risk Disclosure Statement must further state:
3. (c)Table of contents. A table of contents showing, by subject matter, the location of the disclosures made in the Disclosure Document, must appear immediately following the Risk Disclosure Statement.
4. (d)Information required in the forepart of the Disclosure Document.
   1. (1)The name, address of the main business office, main business telephone number and form of organization of the commodity trading advisor. If the mailing address of the main business office is a post office box number or is not within the United States, its territories or possessions, the trading advisor must state where its books and records will be kept and made available for inspection; and
   2. (2)The date when the commodity trading advisor first intends to use the Disclosure Document.
5. (e)Persons to be identified. The names of the following persons:
   1. (1)Each principal of the trading advisor;
   2. (2)The futures commission merchant and/or retail foreign exchange dealer with which the commodity trading advisor will require the client to maintain its account or, if the client is free to choose the futures commission merchant or retail foreign exchange dealer with which it will maintain its account, the trading advisor must make a statement to that effect; and
   3. (3)The introducing broker through which the commodity trading advisor will require the client to introduce its account or, if the client is free to choose the introducing broker through which it will introduce its account, the trading advisor must make a statement to that effect.
6. (f)Business background.
   1. (1)The business background, for the five years preceding the date of the Disclosure Document, of:
      1. (i)The commodity trading advisor; and
      2. (ii)Each principal of the trading advisor who participates in making trading or operational decisions for the trading advisor or supervises persons so engaged.
   2. (2)The trading advisor must include in the description of the business background of each person identified in § 4.34(f)(1) the name and main business of that person's employers, business associations or business ventures and the nature of the duties performed by such person for such employers or in connection with such business associations or business ventures. The location in the Disclosure Document of any required past performance disclosure for such person must be indicated.
7. (g)Principal risk factors. A discussion of the principal risk factors of this trading program. This discussion must include, without limitation, risks due to volatility, leverage, liquidity, and counterparty creditworthiness, as applicable to the trading program and the types of transactions and investment activity expected to be engaged in pursuant to such program (including retail forex and swap transactions, if any).
8. (h)Trading program. A description of the trading program, which must include the method chosen by the commodity trading advisor concerning how futures commission merchants and/or retail foreign exchange dealers carrying accounts it manages shall treat offsetting positions pursuant to § 1.46 of this chapter, if the method is other than to close out all offsetting positions or to close out offsetting positions on other than a first-in, first-out basis, and the types of commodity interests and other interests the commodity trading advisor intends to trade, with a description of any restrictions or limitations on such trading established by the trading advisor or otherwise.
9. (i)Fees. A complete description of each fee which the commodity trading advisor will charge the client.
   1. (1)Wherever possible, the trading advisor must specify the dollar amount of each such fee.
   2. (2)Where any fee is determined by reference to a base amount including, but not limited to, “net assets,” “gross profits,” “net profits,” “net gains,” “pips” or “bid-asked spread,” the trading advisor must explain how such base amount will be calculated. Where any fee is based on the difference between bid and asked prices on retail forex or swap transactions, the trading advisor must explain how such fee will be calculated;
   3. (3)Where any fee is based on an increase in the value of the client's commodity interest account, the trading advisor must specify how that increase is calculated, the period of time during which the increase is calculated, the fee to be charged at the end of that period and the value of the account at which payment of the fee commences.
10. (j)Conflicts of interest.
    1. (1)A full description of any actual or potential conflicts of interest regarding any aspect of the trading program on the part of:
       1. (i)The commodity trading advisor;
       2. (ii)Any futures commission merchant and/or retail foreign exchange dealer with which the client will be required to maintain its commodity interest account;
       3. (iii)Any introducing broker through which the client will be required to introduce its account to a futures commission merchant and/or retail foreign exchange dealer; and
       4. (iv)Any principal of the foregoing.
    2. (2)Any other material conflict involving any aspect of the offered trading program.
    3. (3)Included in the description of any such conflict must be any arrangement whereby the trading advisor or any principal thereof may benefit, directly or indirectly, from the maintenance of the client's commodity interest account with a futures commission merchant and/or retail foreign exchange dealer, and/or from the maintenance of the client's swap positions with a swap dealer or from the introduction of such account through an introducing broker (such as payment for order flow or soft dollar arrangements).
11. (k)Litigation.
    1. (1)Subject to the provisions of § 4.34(k)(2), any material administrative, civil or criminal action, whether pending or concluded, within five years preceding the date of the Document, against any of the following persons; Provided, however, that a concluded action that resulted in an adjudication on the merits in favor of such person need not be disclosed:
       1. (i)The commodity trading advisor and any principal thereof:
       2. (ii)Any futures commission merchant or retail foreign exchange dealer with which the client will be required to maintain its commodity interest account; and
       3. (iii)Any introducing broker through which the client will be required to introduce its account to the futures commission merchant and/or retail foreign exchange dealer and/or swap dealer.
    2. (2)With respect to a futures commission merchant, retail foreign exchange dealer, swap dealer or introducing broker, an action will be considered material if:
       1. (i)The action would be required to be disclosed in the notes to the futures commission merchant's, retail foreign exchange dealer's, swap dealer's or introducing broker's financial statements prepared pursuant to generally accepted accounting principles;
       2. (ii)The action was brought by the Commission; Provided, however, that a concluded action that did not result in civil monetary penalties exceeding $50,000 need not be disclosed unless it involved allegations of fraud or other willful misconduct; or
       3. (iii)The action was brought by any other federal or state regulatory agency, a non-United States regulatory agency or a self-regulatory organization and involved allegations of fraud or other willful misconduct.
12. (l)Trading for own account. If the commodity trading advisor or any principal thereof trades or intends to trade commodity interests for its own account, the trading advisor must disclose whether clients will be permitted to inspect the records of such person's trading and any written policies related to such trading.
13. (m)Performance disclosures. Past performance must be disclosed as set forth in § 4.35.
14. (n)Supplemental information. If any information, other than that required by Commission rules, the antifraud provisions of the Act, other federal or state laws and regulations, any rules of a self-regulatory agency or laws of a non-United States jurisdiction, is provided, such information:
    1. (1)May not be misleading in content or presentation or inconsistent with the required disclosures;
    2. (2)Is subject to the antifraud provisions of the Act and Commission rules, and to rules regarding the use of promotional material promulgated by a registered futures association pursuant to section 17(j) of the Act; and
    3. (3)Must be placed as follows, unless otherwise specified by Commission rules:
       1. (i)Supplemental performance information (not including proprietary trading results as defined in § 4.35(a)(7), or hypothetical, extracted, pro forma or simulated trading results) must be placed after all required performance information;
       2. (ii)Supplemental non-performance information relating to a required disclosure may be included with the related required disclosure; and
       3. (iii)Other supplemental information may be included after all required disclosures; Provided, however, That any proprietary trading results as defined in § 4.35(a)(7), and any hypothetical, extracted, pro forma or simulated trading results included in the Disclosure Document must appear as the last disclosure therein following all required and non-required disclosures.
15. (o)Material information. Nothing set forth in § 4.31, § 4.34, § 4.35 or § 4.36 shall relieve a commodity trading advisor from any obligation under the Act or the regulations thereunder, including the obligation to disclose all material information to existing or prospective clients even if the information is not specifically required by such sections.