Principal

 A principal is an individual who is:

• a sole proprietor of a sole proprietorship;
• a general partner of a partnership;
• a director, president, chief executive officer, chief operating officer or chief financial officer of a corporation, limited liability company or limited partnership;
• in charge of a business unit, division or function of a corporation, limited liability company or limited partnership if the unit, division or function is subject to regulation by the Commission; or
• a manager, managing member or a member vested with the management authority for a limited liability company or limited liability partnership; or

an individual who directly or indirectly, through agreement, holding companies, nominees, trusts or otherwise:

• is the owner of 10% or more of the outstanding shares of any class of a registrant's stock;
• is entitled to vote 10% or more of any class of a registrant's voting securities;
• has the power to sell or direct the sale of 10% or more of any class of a registrant's voting securities;
• has contributed 10% or more of a registrant's capital;
• is entitled to receive 10% or more of a registrant's net profits; or
• has the power to exercise a controlling influence over a registrant's activities that are subject to regulation by the Commission; or

an entity that:

• is a general partner of a registrant; or
• is the direct owner of 10% or more of any class of a registrant's securities; or
• has directly contributed 10% or more of a registrant's capital unless such capital contribution consists of subordinated debt contributed by:
• an unaffiliated bank insured by the Federal Deposit Insurance Corporation;
• a United States branch or agency of an unaffiliated foreign bank that is licensed under the laws of the United States and regulated, supervised and examined by United States government authorities having regulatory responsibility for such financial institutions; or
• an insurance company subject to regulation by any State.

An individual's status as a principal is determined by the individual's 1) ability to control a registrant's business activities; 2) formal title or position with the registrant; and 3) financial or ownership interest in the registrant. Individuals who, through their conduct or activity, directly or indirectly control a registrant are principals of the registrant, irrespective of their formal title or financial interest in the registrant. Similarly, individuals who hold specific positions or titles with registrants (see definition of principal) are also principals of the registrant, irrespective of their ability to control the registrant's business.

Individuals who, directly or indirectly, have a 10% or more financial or ownership interest in the registrant are principals of the registrant, irrespective of their titles, position or ability to control the registrant's business activity. The following examples illustrate how direct and indirect ownership impact an individual's status as a principal based on ownership.

• Example 1: Individual owns 100% of any class of stock of Registrant. Individual is a principal of registrant.
• Example 2: Individual owns 100% of Holding Company's stock and Holding Company owns 50% of Registrant's stock. Individual is a principal because Individual indirectly owns 50% of Registrant's stock (100% x 50%=50%).
• Example 3: Individual owns 100% of Holding Company A's stock. Holding Company A owns 50 % of Holding Company B's stock. Holding Company B owns 50% of Registrant's stock. Individual is a principal of Registrant because Individual indirectly owns 25% of Registrant's stock (100% x 50% x 50%=25%).
• Example 4: Individual owns 50% of Holding Company's stock. Holding Company owns 10% of Registrant's stock. Individual is not a principal of Registrant (based on ownership interest) because Individual indirectly owns 5% of Registrant's stock (50% x 10%=5%).

This same analysis applies to determination of the entitlement to vote, sell or direct the sale of the registrant's voting securities or to receive the registrant's net profits and the contribution of capital to the registrant.

A company is a principal either because it is a general partner of a partnership or based on its ownership or financial stake in a registrant. Unlike individuals, a company's status as a principal based on ownership or capital contribution is determined solely by its direct relationship with the registrant. Holding companies that directly own 10% or more of a class of a registrant's stock or directly contribute 10% of a registrant's capital are principals of the registrant. In contrast, a holding company that indirectly owns a registrant's stock or contributes capital is not a principal. The following example illustrates how direct and indirect ownership impact a company's status as a principal of a registrant.

• Example 1: Holding Company A owns 100% of Holding Company B's stock. Holding Company B owns 50% of Registrant's stock. Holding Company B is a principal of Registrant because Holding Company B directly owns 50% of Registrant's stock. Holding Company A is not a principal of Registrant because although it indirectly owns 50% of Registrant's stock (100% x 50%=50%), it does not directly own 10% or more of Registrant's stock. The same would be true regarding capital contributions.

Principal is technically not a registration class and principals do not apply for registration.  However, the following are required to be filed for individuals who are principals of an applicant or registrant firm

• A completed online Form 8-R
• Fingerprint Cards
• Verification of the Form 8-R
• * A non refundable Principal Application Fee of $85.00

*An application fee is not required if the individual is currently registered with the CFTC in any capacity or is listed as a principal of a current CFTC registrant.