Quote from hoop121:
i have a friend in TX who uses the IB F&F account to manage $10mm in SMA's and he is not registered. he's been doing it for 6 years and hasn't had any problems.
I have a friend who drives a gypsy/livery cab he hasn't had any problems. He can't get E&O insurance because he isn't licensed. And he wont have a problem, until he has a problem. You know what I mean?
I have a friend who grows weed in his garage. He does not take any deductions for the ordinary and necessary expenses associated with his trade/business. His homeowners insurance carrier will not endorse his policy for his trade/business because the insurance carrier does business outside this great state. He wont have a problem, until he has a problem.
I have a friend who does electrical odd-jobs. He does not have the requisite vocational education. He does not work under the supervision of a licensed contractor. He can't get E&O because his activities are not legal in this state. At least he pays his taxes.
You have a friend who trades commodity futures with other peoples money for compensation. He is in Texas and conducts his business outside of Indian Tribal Land, and therefore is subject to the laws of the United States of America. Texas does not regulate his activities, but the United States does. Furthermore, there is no de minimus exemption available under CTFC regulations for managing separate accounts. There is an exemption for private fund managers who - to keep it simple - trade 95% securities and 5% commodities. However, your friend is not registered as an investment advisor (with the SEC or state authorities). Texas does not grant investment advisors a de minimus exemption from registration, even those who solely advise private funds. So, this could not even apply to him. Your friend either is uninsured, or will find that his policy does does not provide him coverage. If he has not provided his clients with adequate disclosure, the clients have
recission as a possible remedy against him. Being registered is of course no guarantee that his disclosures are in order. But there is a good chance that if he is comfortable running an illegal operation, his house is not in order. Your friend wont have a problem until he has a problem.
