What about in the case of equities? (I don't trade futures)
Managed accounts
- Thread starter Worldcrusher
- Start date
What about in the case of equities? (I don't trade futures)
I have been exploring this option. Unfortunately, a full blown hedge fund is only practical with several million AUM. Otherwise, the compliance and accounting costs are prohibitive. Incubation hedge funds are not applicable either, because performance fees cannot be charged and there are strict limitations on who can even place money with the fund. That leaves managed accounts...or perhaps some other alternative I am not aware of. Based on feedback I have received from other traders on ET, it seems that managed accounts are a common practice.
I am now thoroughly confused!
Thanks again,
Daryl
Just got off the phone with the PA securities commission, who were very helpful and customer-oriented. Given that each state is different, in PA an 'amateur' trader can have up to 5 managed accounts if he/she does not hold themselves out to the public be an investment advisor. The issues of taking fees based on performance rather than AUM only apply to those who do not fall under this state exemption and must comply with SEC guidelines.
I also asked if I would lose this exemption because I am about to begin studying for the series 7 and upon successfully passing the test would then be considered a professional. I was told that as long as I did not hold myself out as an investment advisor, the managed accounts I currently have would be grandfathered and I would be permitted to continue managing those accounts.
Hope this helps...
Sincerely,
Daryl
I also asked if I would lose this exemption because I am about to begin studying for the series 7 and upon successfully passing the test would then be considered a professional. I was told that as long as I did not hold myself out as an investment advisor, the managed accounts I currently have would be grandfathered and I would be permitted to continue managing those accounts.
Hope this helps...
Sincerely,
Daryl
Check your state rules/regulations but if I recall correctly, there is a way to charge performance fees for CERTAIN "accredited investor" types with portfolios in excess of a certain size, even without starting a hedge fund, etc. At least that's what I remember when studying for the Series 65 exam a few years ago.
Daryl your actions as regards accounting are devious and subversive to economic transparency.
I hope you deeply reconsider your outragious actions before someone files suit against you for CPA violation. After extensive research I have compiled the following report which I feel you will benifit from if you pay heed:
"Practice of public accounting" means performing or offering to perform any engagement that will result in the issuance of an attest report and, with respect to a person who holds a CPA certificate, PA registration, foreign certificate, or firm registration, any other services involving the use of accounting or auditing skills as established by rules adopted by the accountancy board.
"Public accounting firm meens a sole proprietorship, a partnership, a limited liability company, a professional organization, a corporation-for-profit, or any other business organization that is engaged in the practice of public accounting in this state
"Opinion report means any opinion on a financial statement that is expressed in accordance with generally accepted auditing standards as to the fairness of presentation of information and that is used for guidance in financial transactions, for accounting, or for assessing the status or performance of commercial and noncommercial enterprises, whether public, private, or governmental.
"And finally Peer review" means a study, appraisal, or reveew of one or more aspects of the professional work of a public accounting firm that meets the standards and requirements set forth by the accountancy board.
I hope you deeply reconsider your outragious actions before someone files suit against you for CPA violation. After extensive research I have compiled the following report which I feel you will benifit from if you pay heed:"Practice of public accounting" means performing or offering to perform any engagement that will result in the issuance of an attest report and, with respect to a person who holds a CPA certificate, PA registration, foreign certificate, or firm registration, any other services involving the use of accounting or auditing skills as established by rules adopted by the accountancy board.
"Public accounting firm meens a sole proprietorship, a partnership, a limited liability company, a professional organization, a corporation-for-profit, or any other business organization that is engaged in the practice of public accounting in this state
"Opinion report means any opinion on a financial statement that is expressed in accordance with generally accepted auditing standards as to the fairness of presentation of information and that is used for guidance in financial transactions, for accounting, or for assessing the status or performance of commercial and noncommercial enterprises, whether public, private, or governmental.
"And finally Peer review" means a study, appraisal, or reveew of one or more aspects of the professional work of a public accounting firm that meets the standards and requirements set forth by the accountancy board.
Quote from Worldcrusher:
I have been exploring this option. Unfortunately, a full blown hedge fund is only practical with several million AUM. Otherwise, the compliance and accounting costs are prohibitive. Incubation hedge funds are not applicable either, because performance fees cannot be charged and there are strict limitations on who can even place money with the fund. That leaves managed accounts...or perhaps some other alternative I am not aware of. Based on feedback I have received from other traders on ET, it seems that managed accounts are a common practice.
I am now thoroughly confused!
Thanks again,
Daryl
If you have more than 5 accounts and if you are not going to market your funds, you can set up a limited partnership with all the account holders with the operating agreement that you take 20% of the company profit before the remaining profit going to the limited partners.
This is similar to a "private hedge fund" that cannot accept outside money.
If you're going this route, I would look into a limited liability company (LLC) over a limited partnership due to the flexibility and limited liability for all owners. If I were going to market a hedge fund, I might then look at the limited partnership due to the familiarity of such fund structure in the hedge fund community.
I thought I read on the NFA website that we can only accumulite up to 400K in all the friends and family accounts until you have to get a special license. So you can have 10 managed 'friends and family' accounts as long as they stay below 400K. Regardless of what state you live in.
Well it's tricky. Let me first say I NOW am in a managed account. Why? (1) I did not qualify financially to be in the hedge fund my family is using. (2) I make a lot of my own picks. (3) the % taken away is a lot less and you still get the benefits of being in on the firms calls.
The downside is the sells aren't quite as timely as in their funds which are so based on performance. And I'm not getting the IPO stuffing that brings the hedge funds up to their goals.
~stoney.
PS In managing friends and family money why not just have them deposit some stock gifts into your personal account as repayment for your work and be happy with that?
The downside is the sells aren't quite as timely as in their funds which are so based on performance. And I'm not getting the IPO stuffing that brings the hedge funds up to their goals.
~stoney.
PS In managing friends and family money why not just have them deposit some stock gifts into your personal account as repayment for your work and be happy with that?