Steven Fredman, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022

Dear Mr. Fredman:

This is in response to your letter of October 12, 1999, concerning the application of Regulation X (12 CFR 224) to an offshore limited partnership.

We understand your client is a foreign limited partnership (the "Master Fund") formed for the purpose of investing and trading in securities and other financial instruments both inside and outside of the United States. Profits and losses generated by the Master Fund flow to two existing funds (respectively, the "Domestic Fund" and the "Offshore Fund"). The Domestic Fund is a U.S. limited partnership which will receive 35 percent of the Master Fund's profits and losses. The Offshore Fund is a foreign corporation which will receive 65 percent of the Master Fund's profits and losses. Approximately 31 percent of the Offshore Fund's voting shares are owned by U.S. persons.

You believe that the Master Fund is not a "foreign person controlled by a United States person" as defined in Regulation X (12 CFR 224.2(c)) and the Securities Exchange Act of 1934 (15 USC 78g(f)(2)(C)). The definition includes "any noncorporate entity in which United States persons directly or indirectly have more than a 50 per centum beneficial interest." The Domestic Fund is a "United States person" (12 CFR 224.2(a); 15 USC 78g(f)(2)(A)) with a 35 percent beneficial interest in the Master Fund. In addition, 31 percent of the Foreign Fund's 65 percent interest in the Master Fund is beneficially held by U.S. persons, which works out to an additional 20 percent. When combined, the beneficial interest in the Master Fund held by U.S. persons equals 55 percent. Board staff believes that in these circumstances the Master Fund is a foreign person controlled by a United States person for purposes of Regulation X. Different facts could compel a different conclusion.

Yours truly,

(Signed) Scott Holz

Scott Holz