Need to be registered Investment Adviser for LLC?

rogerwilcom · Oct 22, 2012

Myself and a colleague have formed an LLC. We both have put in money to trade futures. I will be doing the trading and he will be running the business (accounting, book keeping, taxes, etc). We are not taking money from anyone else.

Do I or does the LLC need to be registered as an Investment Adviser? We are not trading any money outside of the LLC. We have no investors. Only active members of the LLC.

Does anyone know one way or another?

dave5578 · Oct 22, 2012

Best of luck with the business.

Hopefully some others here can give you some great advice.

I'm sure you know, but in these matters it is best to get a verified answer from a local professional. Nothing wrong with asking for ideas though.

Again, best of luck!

1245 · Oct 22, 2012

Quote from rogerwilcom:

Myself and a colleague have formed an LLC. We both have put in money to trade futures. I will be doing the trading and he will be running the business (accounting, book keeping, taxes, etc). We are not taking money from anyone else.

Do I or does the LLC need to be registered as an Investment Adviser? We are not trading any money outside of the LLC. We have no investors. Only active members of the LLC.

Does anyone know one way or another?

No, you don't have to be registered. You're not taking fees from anyone. You're not rasing money from others.

lindq · Oct 22, 2012

Quote from rogerwilcom:

Myself and a colleague have formed an LLC. We both have put in money to trade futures. I will be doing the trading and he will be running the business (accounting, book keeping, taxes, etc). We are not taking money from anyone else.

Do I or does the LLC need to be registered as an Investment Adviser? We are not trading any money outside of the LLC. We have no investors. Only active members of the LLC.

Does anyone know one way or another?

The SEC doesn't care that you and another are partnering with each other. But hopefully you care enough to have a written agreement in place. Bad things can happen to good relationships when money is involved.

ScalperJoe · Oct 22, 2012

Quote from rogerwilcom:

Myself and a colleague have formed an LLC.

Do I or does the LLC need to be registered as an Investment Adviser?

Here's the SEC link for the definition of an IA and exemptions.

http://www.sec.gov/divisions/investment/iaregulation/memoia.htm

1245 · Oct 23, 2012

Quote from ScalperJoe:

Here's the SEC link for the definition of an IA and exemptions.

http://www.sec.gov/divisions/investment/iaregulation/memoia.htm

Futures are under the NFA:

http://www.nfa.futures.org/NFA-registration/index.HTML

marketsurfer · Oct 23, 2012

Quote from lindq:

The SEC doesn't care that you and another are partnering with each other. But hopefully you care enough to have a written agreement in place. Bad things can happen to good relationships when money is involved.

Very bad things.

rogerwilcom · Oct 23, 2012

Quote from dave5578:I'm sure you know, but in these matters it is best to get a verified answer from a local professional.

Dave,

You are right. Unfortunately. I have talked with an attorney about this and he told me that I do need to be registered as an IA in my State. This did not seem correct given what I've read about both the federal and state rules, so it prompted me to come here.

Maybe this guy is right, I do need to register. But it sure sounds wrong to me. The state has been absolutely no help as they only say "talk to an attorney".

I'm tempted to talk with a second attorney, but this is getting pretty expensive for what seems to be a pretty straight forward question/answer. Maybe I'm just being stubborn and I need to go through the process of being registered. But gauging from the responses here in this forum, I'm not the only one that thinks that I do *not* need to be registered as one.

Thanks everyone. I appreciate all of the responses and will continue to listen to anything else you may have to say.

southbeach4me · Oct 23, 2012

You aren't acting as an investment advisor as long as you aren't collecting fees offering services rendered(like managing client funds) or any type of investment advice to any entity(person or corp) outside your LLC; you do not need to be registered as an investment adviser.

http://en.wikipedia.org/wiki/Registered_Investment_Advisor

Seems that the attorney you asked is not specialized in SEC or CFTC law. Only an atty that is specialized in these areas of market finance should be giving you advice.

CT10Gov · Oct 23, 2012

State blue sky rules can be quite different from federal regs. Did you ask him which state laws require your registration?

Quote from rogerwilcom:

Dave,

You are right. Unfortunately. I have talked with an attorney about this and he told me that I do need to be registered as an IA in my State. This did not seem correct given what I've read about both the federal and state rules, so it prompted me to come here.

Maybe this guy is right, I do need to register. But it sure sounds wrong to me. The state has been absolutely no help as they only say "talk to an attorney".

I'm tempted to talk with a second attorney, but this is getting pretty expensive for what seems to be a pretty straight forward question/answer. Maybe I'm just being stubborn and I need to go through the process of being registered. But gauging from the responses here in this forum, I'm not the only one that thinks that I do *not* need to be registered as one.

Thanks everyone. I appreciate all of the responses and will continue to listen to anything else you may have to say.