Boz. That's correct, but if you have concerns, consult an attorney.
As I indicated earlier, the problems always occur when things go wrong. As long as things are going well, who is going to complain/object? It's what I call the 'good time exemption' - as long as everybody's having a good time, you're exempt. What a family company/corporation/llc does (as long as it doesn't violate criminal laws) is really no one's business unless some sort of complaint is filed and some governing entity has the motivation to actually do work and take action. Another factor is that when state lines are crossed, federal authorities have jurisdiction.
I was actually aware of several companies and individuals that violated exactly the items listed above AND fradulently sold/brokered mortages and promisorry notes. The state's attorney general gave an opinion that the products were un-registered securities and the people involved were guilty on the face of the transactions for selling un-registered securities, having no broker's liscense and would be prosecuted, but never were. My involvement was that I worked for a competitor of those individuals and we were forced to do lengthy research (at a high cost - yet another story in itself) to ensure we were not in potential violation, which we weren't, since we had met the criteria as well as not selling securities but rather existing promisorry notes.
Additionally, in unrelated dealings, we had purchased some fradulent mortgages and tried unsuccessfully to get the principals involved prosecuted under these laws and couldn't get the state or federal securities authorities involved - they were just not interested. We finally had the local district attorney prosecute the case under general fraud statues. We preferred to have the securities laws enforced since the remedies were much more favorable. The result was that we had only 5% of the fraud prosecuted in a jury trial, and the guys never spent a day in jail and are paying back restitution over 20 years.
Lessons Learned: There are much bigger issues involved in a hedge fund than this area. IMO, create an LLC, having 1 to N members, trade with it and see if you can make money. If so, then take the steps to add others if you stiil see the need.
My question for you. If you are making money trading, why do you want to distract from trading just to add others to report to and dilute your profits with?
.02
As I indicated earlier, the problems always occur when things go wrong. As long as things are going well, who is going to complain/object? It's what I call the 'good time exemption' - as long as everybody's having a good time, you're exempt. What a family company/corporation/llc does (as long as it doesn't violate criminal laws) is really no one's business unless some sort of complaint is filed and some governing entity has the motivation to actually do work and take action. Another factor is that when state lines are crossed, federal authorities have jurisdiction.
I was actually aware of several companies and individuals that violated exactly the items listed above AND fradulently sold/brokered mortages and promisorry notes. The state's attorney general gave an opinion that the products were un-registered securities and the people involved were guilty on the face of the transactions for selling un-registered securities, having no broker's liscense and would be prosecuted, but never were. My involvement was that I worked for a competitor of those individuals and we were forced to do lengthy research (at a high cost - yet another story in itself) to ensure we were not in potential violation, which we weren't, since we had met the criteria as well as not selling securities but rather existing promisorry notes.
Additionally, in unrelated dealings, we had purchased some fradulent mortgages and tried unsuccessfully to get the principals involved prosecuted under these laws and couldn't get the state or federal securities authorities involved - they were just not interested. We finally had the local district attorney prosecute the case under general fraud statues. We preferred to have the securities laws enforced since the remedies were much more favorable. The result was that we had only 5% of the fraud prosecuted in a jury trial, and the guys never spent a day in jail and are paying back restitution over 20 years.
Lessons Learned: There are much bigger issues involved in a hedge fund than this area. IMO, create an LLC, having 1 to N members, trade with it and see if you can make money. If so, then take the steps to add others if you stiil see the need.
My question for you. If you are making money trading, why do you want to distract from trading just to add others to report to and dilute your profits with?
.02
