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How is Commodities Online regulated?

2010/06/22

How is Commodities Online regulated?

“Since Commodities Online is not buying or selling commodities futures or options, it is not a Commodity Pool Operator and it is not regulated by the CFTC or the NFA.

The participations in the pre-sold commodities contracts are “securities” due to the fact that the investors are dependent on the managerial efforts of Commodities Online LLC in carrying out the contracts. Commodities Online is subject to the anti-fraud provisions of federal and state securities laws. The offering of contract participations is done pursuant Rule 506 of Regulation D (for US residents) or Regulation S (for non-residents) promulgated by the SEC under the Securities Act of 1933, as amended, both of which provide exemptions from the registration requirements of the Securities Act. Commodities Online LLC files Form D with the SEC with regard to each commodity contract in which participations are sold and also makes state notice filings where required.

Investments in the contract participations are “self-directed” by the investors. Commodities Online LLC has no discretionary trading authority and does not make recommendations as to specific contracts. Thus, Commodities Online LLC is not acting as an “investment advisor.” Moreover, Commodities Online LLC does not pay commissions or finder’s fees for investments in the contract participations, so Commodities Online is generally exempt from the various state and federal laws governing the registration of securities brokers and dealers.

Please notice the first and last question of the 2nd paragraph.  Highlighted in bold tells how the pre-sold contracts are regulated and where you can find the filings of each contract.

There have been online postings with allegations about these issues.  The FAQ file clearly states the answers.  Any blog posts to the contrary has not been verified by the poster, most notably because, even after invitations to call or meet with the company, the poster has refused to either call or meet with the company.  We have put forth our effort to pro-actively answer the questions raised with no response.

While we cannot control what people say, we can clearly state who we are, what we are and where you can verify what we are.  If any question has not been answered in the FAQ file, please forward that question to be answered as best we can, add it to the FAQ file and clear up the issue”.

Tony Diamante
Marketing Director

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