Peregrine Financial Group, Inc. (“PFG”) is pleased to sponsor the CTA Traders Challenge (the “Challenge”). These Official Entry Rules (“Rules”) describe all the terms and conditions of entry into the Challenge. Subject to the terms and conditions described herein. The Challenge will consist of four quarterly contests where the trading advisor (“Entrant”) who demonstrates the best performance against the Challenge Criteria (see section four (4) below) for each quarterly contests, will be awarded the opportunity to trade a $250,000 managed account for PFG. The dates of the four contests are (March 1, 2009 through May 31, 2009), (June 1, 2009 through August 31, 2009), (September 1, 2006 through November 30, 2009) and (December 1, 2009 through February 28, 2010). The Entrants who place in either first or second will be eligible to participate in a six-month CTA Championship Showdown where the winner from this field of eight CTA finalists will be awarded the opportunity to trade a $1 million managed account for PFG. The Championship Showdown Challenge runs from March 1, 2010 through August 31, 2010.
Please review these Rules carefully. If you wish to participate in the Challenge, please indicate your acceptance to the terms and conditions by completing, signing, and submitting the CTA Traders Challenge Registration Form located on PFG's website at http://www.pfgbest.com/cta/register.asp
1. ELIGIBLE ENTRANTS AND ACKNOWLEDGEMENT AND ACCEPTANCE OF ADDITIONAL RISK
A. All Entrants must be eligible to open an account at PFG.
B. Entrant must not be a principal or an employee of PFG.
C. If the Entrant is operating an account pursuant to a Limited Power of Attorney; the Entrant must be a properly registered commodity trading advisor ("CTA") and member of NFA or must manage the Account Owner's account pursuant to a valid exemption from such registration and membership requirements.
D. The Account Owner acknowledges and agrees that the entry of the Account into the Challenge may create an incentive for the Entrant to trade the Account in a more aggressive or speculative fashion than otherwise would be the case. By executing the Account Registration Form which includes understanding and agreeing to these Rules, the Account Owner specifically acknowledges and accepts that this Challenge Award incentive (see Section 3, below) may substantially increase the risk of loss in the Account and agrees to indemnify and hold harmless PFG and their principals, employees, agents and assigns from and against any and all liabilities, losses, damages, costs and expenses, including attorney's fees, resulting from the Account's participation in the Challenge and the Entrant's management of the Account.
2. ESTABLISHMENT OF CHALLENGE TRADING ACCOUNT
Prior to March 1, 2009, June 1, 2009, September 1, 2009 or December 1, 2009 (the "Challenge Commencement Dates"), each Entrant must establish on PFG's books a segregated trading account (the "Account") for each entry into the Challenge. Entrants may trade more than one Account in the Challenge if they wish to demonstrate the results of different trading programs. In any case where the Entrant and the entity funding the account (the "Account Owner") are different, the Account Owner must also sign this Registration Form and complete the Limited Power of Attorney authorization for the "trading agent" (such as a CTA). The PFG account opening documentation package includes this Limited Power of Attorney document for discretionary accounts.
Please consider the following issues carefully when establishing an Account:
A. The minimum funded account size shall be $50,000.
B. For purposes of determining the Account's performance against the Challenge Criteria, the Entrant must indicate the "Nominal Value" of the Account on the Challenge Registration Form prior to the Challenge Commencement Date(s). This is the stated size and beginning value as determined by the Entrant of the managed account against which profits/losses are measured in order to determine account performance results.
C. The percentage rate of return earned in the Account will be based on its Nominal Value rather than its funding level. Therefore, deposits or withdrawals from the Account (which will affect the Account's funding level but not its Nominal Value) will not affect the valuation of the Account against the Challenge Criteria. The Nominal Value of the Account may be adjusted during the Challenge Term only upon PFG's consent, which it may withhold in its sole discretion.
3. DETAILS OF THE CHALLENGE AWARD WINNER
PFG shall establish a segregated trading account of Nominal Value $250,000 (the "Award Account") on its books and shall issue a limited power of attorney over the Award Account to the Entrant trading the Account that demonstrates the best "risk adjusted" performance (see Section 4, below) against the Challenge Criteria during each of the quarterly contests. The Challenge Winner(s) shall manage the Award Account in the same manner employed during the Challenge Term. The Challenge Winner(s) shall earn a quarterly incentive fee on net profits in the Award Account above a high water mark. The Challenge Winner(s) agrees to execute any and all documents necessary or advisable regarding the establishment and ongoing management of the Award Account, an affidavit of compliance with this Agreement and any liability or publicity releases that may from time to time be requested by PFG. PFG shall establish a segregated trading account of Nominal Value $1,000,000 (the "Award Account") on its books and shall issue a limited power of attorney over the Award Account to the Entrant trading the Account that demonstrates the best performance (see Section 4, below) against the Challenge Criteria for the CTA Championship Showdown. The Challenge Winner shall manage the Award Account in the same manner employed during the Challenge Term. The Challenge Winner shall earn a quarterly incentive fee on net profits in the Award Account above a high water mark. The Challenge Winner agrees to execute any and all documents necessary or advisable regarding the establishment and ongoing management of the Award Account, an affidavit of compliance with this Agreement and any liability or publicity releases that may from time to time be requested by PFG.
PFG may close any and/or all Award Account(s) at any time and for any reason in its sole discretion. However, PFG intends to maintain the Award Account(s) for as long as the Award Account generates returns that are commensurate with the performance volatility and risk exhibited by the Award Account.
4. CHALLENGE CRITERIA
PFG will evaluate the performance of all Accounts in the Challenge. PFG will calculate the performance results of each Entrant and verify the calculations. All Entrants are welcome to have the Challenge results audited by an accounting firm acceptable to PFG at the Entrant's expense. The criteria that shall be used in determining the winner are straightforward. Each Entrant's total Challenge period return is divided by that Entrant's daily standard deviation to determine a risk adjusted return rate. As the daily standard deviation calculation incorporates the Account's daily percentage change divided by the Entrant's stated Nominal Account Value, Entrants should carefully consider this when indicating their Nominal Account Value. The winning Challenge Entrant must also have had a "reward to risk" ratio that was greater than the published MarHedge CTA Index "reward to risk" ratio during the Challenge period.
PFG will periodically post on its website the relative standings and performance of each Entrant in the Challenge and Entrant and Account Owner explicitly consent to such posting by signing this Agreement.
5. TRADING REQUIREMENTS
Entrant place orders through PFG's online entry platform or PFG's telephone order desk. Trading in the Challenge shall be strictly limited to exchange-traded futures and options on futures available through PFG's order desks.
In the event of errors in order entry or execution, the determination of PFG shall be final with regard to Challenge standings.
6. CONSENT TO PUBLICATION OF RANKING AND RESULTS
Entry into the Challenge constitutes permission for PFG to post Trader's information, including, without limitation, name, performance and relative ranking, on PFG's website and to use for purposes of advertising and promotion without further compensation.
7. ENTRANTS USE OF CHALLENGE FOR PROMOTIONAL PURPOSES
Entrant acknowledges that PFG's name and that of the Challenge is copyrighted and are the sole property of PFG. Entrant shall not, either alone or in concert with others, use his/her participation in the Challenge for promotional purposes unless approved in advance in writing by PFG. If Entrant violates this provision, Entrant may be disqualified from competing in the Challenge or future Challenges at PFG's sole discretion. If determined by PFG to be in violation, Entrant agrees to pay all legal fees and damages incurred by PFG to enforce this provision.
8. COMPLIANCE WITH PFG's CUSTOMER AGREEMENTS
Entrant and Account Owner hereby agree to comply with all terms and conditions outlined in any PFG account forms and risk disclosure separately executed in opening and maintaining the Account (collectively, "Customer Agreements") (including, without limitation, all margin requirements described therein) and further agree to comply with all terms and conditions of this Agreement, which may restrict their rights under the Customer Agreements. PFG reserves the right to amend, waive or interpret any provision of this Agreement if, in its sole discretion, such amendment, waiver or interpretation would be in the best interest of the Challenge.
Entrant or Account Owner may at any time withdraw from the Challenge upon written notice to PFG or by closing the Account.
9. COMMUNICATION DELAYS
PFG is not responsible for late, lost, misdirected, misdelivered, incomplete, illegible, or unintelligible account documentation, messages, or mail; unavailable network connections; failed, incomplete, garbled or delayed computer transmissions; online failure; hardware, software or other technical malfunctions or disturbances; or any other communications failures or circumstances affecting, disrupting or corrupting the Challenge in any manner including without limitations, Entrant's ability to participate in the Challenge, or winner notification or winner response to notification.
10. INDEMNIFICATION
In addition to the agreements to indemnify and hold harmless elsewhere in this Agreement, Entrant and Account Owner jointly and severally agree to indemnify and hold harmless PFG, and its principals, employees, agents and successors from and against any and all liabilities, losses, damages, costs and expenses, including attorney's fees, resulting from or incurred by any of them for any reason, including, without limitation, the Account's participation in the Challenge, the Entrant's management of the Account and any misrepresentations made by Entrant or the Account Owner.
All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement or the rights and obligations of Entrants, Account Owners, and PFG in connection with the Challenge shall be governed by and construed in accordance with the substantive laws of the State of Illinois, USA without regard to choice of law rules.
11. POSTPONEMENT, CANCELLATION, ACCEPTANCE AND REMOVAL
PFG reserves the right to modify the Challenge Term, to postpone the Challenge Commencement Date or to cancel the Challenge if, in its sole discretion, it determines that such action is reasonable and necessary. PFG may reject any Entrant's application for any reason. Furthermore, PFG has the right to remove or bar any Entrant from the Challenge for any reason in its sole discretion, including, without limitation, barring any Entrant who would tend to dishonor the Challenge; or who has violated any rule, law or regulation pertaining to futures trading; or has attempted to benefit from any collusive or other trading irregularity. PFG will review and monitor all Accounts throughout the Challenge in the interest of protection and fairness of all participants.
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