friend said assent now requiring llc consent form

Quote from UDon'tKnowMe:

A hedge fund manager can make an "override" on his hedge funds trading. It is called commission recapturing. He has an agreement with his Prime Brokerage for 5 cents per share for the hedge fund, but he has the Prime Brokerage charge the fund 10 cents a share and the Prime Brokerage gives the manager the 5 cent difference. However the hedge fund manager has to have this arrangement written in the hedge fund charter for the investors to see.
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A fee per trade may not be charged for clients inside the US (or US protectorates) by the advisor of hedge fund ( Not talking about soft dollars here ).

Hedge funds have different structures including master/feeder setups where fee per trade may be charged offshore and rolled into the return on the US side in the return of the fund.

A single hedge fund can be made up of more than one entity and located in more than one jurisdiction, so your mileage may vary.
 
Quote from Maverick74:

No, that's called a soft dollar agreement. Not the same thing. If you come into my LLC and use my funds to trade and I charge you on your transactions, that makes me a BROKER. If I act like a BROKER without being registered as one, I am violating the law.

A soft dollar agreement is not the same thing as charging someone for making transactions. However one could start a fund, bring in a trader, don't charge him anything and take a cut of his profits. But why I am doing that again?
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Commission-recapture arrangements do not pose the same potential for conflicts
of interest because the rebated commissions directly benefit, and are the property of, the
client, not the adviser. Thereafter, the use of the rebated commissions is subject to the
same limitations as the client's cash is generally and the use of those rebated
commissions is as transparent as any other cash expense of the client. <b>Most importantly,
commission-recapture programs are dissimilar from soft dollars in that they are outside
the scope of the safe harbor: recaptured commissions are hard dollars, not services or credits for services.</b>

Explained here http://www.publicpensionsonline.com/members/images/LJRprofile.pdf

The money goes back into the fund to pay salaries or cunsultant fees.
 
Quote from UDon'tKnowMe:

Commission-recapture arrangements do not pose the same potential for conflicts
of interest because the rebated commissions directly benefit, and are the property of, the
client, not the adviser. Thereafter, the use of the rebated commissions is subject to the
same limitations as the client's cash is generally and the use of those rebated
commissions is as transparent as any other cash expense of the client. Most importantly,
commission-recapture programs are dissimilar from soft dollars in that they are outside
the scope of the safe harbor: recaptured commissions are hard dollars, not services or
Bingham McCutchen LLP credits for services.

Explained here http://www.publicpensionsonline.com/members/images/LJRprofile.pdf

The money goes back into the fund to pay salaries or cunsultant fees.
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Yes I understand, but the commisions CANNOT flow from the client to the LLC owner. If you bring in partners and call them Class B members of your LLC and that money flows back to the class A partners, that won't work. If you are talking about setting up an entity with one or two other guys and making them all managing partners, that could work. But again I have to ask, why on earth would you do that? I'm not trying to be difficult here, but no one is going to do that.
 
mav,
you could set up an llc like a hedgefund and payout 75%,make money on commissions but not take a deposit but take a training fee. a firm in california does this and everyone is happy.
 
Quote from Maverick74:

You nailed it! There lies the rub. Yes, you can setup an LLC to act like a private fund and not take any deposits. But you cannot charge any commisions!!! Not just over-rides, but zero commisions. Who the f*ck is going to do that? You think I'm going to let anyone trade my money with zero commision and expose all my capital to risk? No f*cking way.

Once you remove the incentive for guys to setup sub-LLC's, the supply will be gone. The whole idea behind the sub-LLC was for a trader to break off on his own under a prop firm and rape newbies on over-rides while at the same time lowering his commisions from the bulk rate. If he can't do that anymore, no reason to have sub-LLC's. This business is not about charity. It's about making money. You remove the profit incentive, you remove the business.
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You aren't using enough imagination here. But I am not loking to get into an argument about it. Just saying if a fund didn't take deposits from traders and only the fund's capital is at risk there is a legal way to structure it to the liking of both the traders and the owners. But most LLC's aren't going to take all the risk so it isn't a viable solution.
 
Quote from UDon'tKnowMe:

You aren't using enough imagination here. But I am not loking to get into an argument about it. Just saying if a fund didn't take deposits from traders and only the fund's capital is at risk there is a legal way to structure it to the liking of both the traders and the owners. But most LLC's aren't going to take all the risk so it isn't a viable solution.
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I agree, there are ways to do it, but it's not worth the risk.
 
Quote from Warrior4g:

mav,
you could set up an llc like a hedgefund and payout 75%,make money on commissions but not take a deposit but take a training fee. a firm in california does this and everyone is happy.
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they aren't the only ones.
 
Quote from Warrior4g:

mav,
you could set up an llc like a hedgefund and payout 75%,make money on commissions but not take a deposit but take a training fee. a firm in california does this and everyone is happy.
More...


Regulators are probably not happy.
 
So any guy or group that was running a sub-llc off Assent will now have to just go back to trading prop for themselves (to make themselves decent money), and maybe make some money off the traders in THEIR location off a desk fee?

Sound right - no more LEGAL opportunity to make any hits off the commissions charged to the prop traders from Assent the ACTUAL B/D (for the traders in your office that used to be under your sub-llc off Assent?).

Desk fees, training fees, and or profit splits seem to be the only way for a Sub-llc to make ANY money off the traders in their office now to cover the costs of that office (and make a profit if any for that location).

***So, how about a monthly "floating" profit split equal to what would have been the monthly commission overide on a per trader basis. wink, wink :cool:

I mean, how in the hell is the guy running the office suppose to make any money now off his traders he is providing a roof for - seems messed up imo. Great job SEC, NOT!
 
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