Subject: File No. S7-24-15
From: S. Aveed Majd

February 16, 2016

In my opinion, Rev. Rul. 2006-1 (the "Ruling"), which establishes that RIC investments in commodity-linked derivatives (later clarified and narrowed by Rev. Rul. 2006-1 to limit this Ruling to commodity-linked swap contracts) are not securities for purposes of the RIC "Qualifying Income Test" and therefore do not constitute "qualifying income," was circumvented via a short and nonsensical argument in the form of a brief appx. 4.5-page, double-spaced, memorandum (the "Memorandum") which argued that Rev. Rul. 2006-1 did not apply with respect to numerous "alternative" investment fund structures which were taking advantage of tax incentives associated with RIC qualification.

The Memorandum made its argument by reference to the RIC "Other Income" provision (Code Sec. 851(b)(2)), arguing that the Ruling referenced the Other Income provision and therefore the Other Income provision could be applied to conclude that such instruments were in fact Other Income and hence Qualifying Income after all. However, in my opinion, this argument does not make sense, because the Ruling's reference to the Other Income provision was for purposes of proving the opposite.

In my opinion, the Memorandum, which was used for at least seven different investment fund structures (and likely at least seven more), was blatantly incorrect.