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Opening up a firm this way
- Thread starter Sky123987
- Start date
Quote from Sky123987:
Say you have a retail account and would like to hire traders.
You will accept no capital contributions from the traders
You will NOT mark up commissions
You take a certain percentage of profits.
This would be considered legal in the eyes of the SEC correct?
Are you training them?
"You take a certain percentage of profits." --> somewhat optimistic, given the likely future performance of most people walking in the door...
Sky,
The structure you describe is pretty much the ONLY acceptable structure that doesn't need to be registered with the SEC, according to my conversations with the SEC. Which firms/people allow this??
The structure you describe is pretty much the ONLY acceptable structure that doesn't need to be registered with the SEC, according to my conversations with the SEC. Which firms/people allow this??
Quote from Sky123987:
Say you have a retail account and would like to hire traders.
You will accept no capital contributions from the traders
You will NOT mark up commissions
You take a certain percentage of profits.
This would be considered legal in the eyes of the SEC correct?
Quote from Sky123987:
Say you have a retail account and would like to hire traders.
You will accept no capital contributions from the traders
You will NOT mark up commissions
You take a certain percentage of profits.
This would be considered legal in the eyes of the SEC correct?
Yes, perfectly legal. See Green Trader Tax for discussions on this topic.
Again, simply call the SEC and explain what the firm is doing and ask them if its legal. "transaction based compensation" is only allowed for registered broker dealers. This is pretty black and white:
Section 3(a)(4) of the Exchange Act defines a âbrokerâ as a person, including a company,6 engaged in the business of effecting transactions in securities for the account of others. A person acts as a broker if it regularly âparticipates in securities transactions at key points in the chain
of distribution.â7 Actions indicating that a person is âeffectingâ securities transactions include soliciting investors; handling customer funds and securities; participating in the order-taking or order-
routing process; and extending or arranging for the extension of credit in connection with a securities transaction. A key factor indicating that a person is âengaged in the businessâ is the receipt of transaction-based compensation.
Section 3(a)(4) of the Exchange Act defines a âbrokerâ as a person, including a company,6 engaged in the business of effecting transactions in securities for the account of others. A person acts as a broker if it regularly âparticipates in securities transactions at key points in the chain
of distribution.â7 Actions indicating that a person is âeffectingâ securities transactions include soliciting investors; handling customer funds and securities; participating in the order-taking or order-
routing process; and extending or arranging for the extension of credit in connection with a securities transaction. A key factor indicating that a person is âengaged in the businessâ is the receipt of transaction-based compensation.
Quote from Sky123987:
Just wondering. Not any firms I know of.
So this would be not allowed and must be registered w/ the sec etc.... Correct?
No capital Contribution
% payout
Markup on commission