Question about leaving a prop firm

S

sweet&tasty

If you leave a prop firm what right does that firm have to use your trading account after you have left. If someone else used your account and lost money could you be liable....and if they made money in that account could you be liable for taxes on that profit.

Are there SEC regulations against using someone elses account? There must be for firms like Bright or Tuco where a person funds that account with their own money....but what about at firms like Swifttrade or Title where a person doenst use their own money?
 
Most prop firms use what is called an omnibus account. It basically collects all the accounts together to get to the exchange and they use the one account for reduced fees, margin etc. As long as the firm isn't breaking any rules the Sec doesn't really care.
 
Most prop firms use what is called an omnibus account. It basically collects all the accounts together to get to the exchange and they use the one account for reduced fees, margin etc. As long as the firm isn't breaking any rules the Sec doesn't really care.
 
This doesnt make any sense if you think about it. Why would they want to intentionaly incur a loss if you are no longer there? I could care less who trades under my old account number Im no longer there.

When you leave resign with registered mail and you are set. Prop firms are sleazy but they arent insane enough to incur losses and try to tie them to former employees.
 
Quote from sweet&tasty:

If you leave a prop firm what right does that firm have to use your trading account after you have left. If someone else used your account and lost money could you be liable....and if they made money in that account could you be liable for taxes on that profit.

Are there SEC regulations against using someone elses account? There must be for firms like Bright or Tuco where a person funds that account with their own money....but what about at firms like Swifttrade or Title where a person doenst use their own money?
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If you leave an actual prop firm, like Swift or Title (and that is an important distinction, 'actual prop'), there is no further liability to the trader who was trading THE account. Notice the emphasis on THE account , not YOUR account. It never was YOUR account in the first place! The firm is only allowing you to trade one of THEIR accounts while you are under contract to them. You, like many others might be under the mistaken impression that you in some way have ownership or enetitlement to the account you are trading during you tenure.............you DO NOT. Do not mistake the fact that many actual prop firms may use a username and password unique to the trader for you to access an account while you are trading for them. This is not intended to imply that it is YOUR account, only that you are given user access and permission to trade that account while you are there, an account which is the sole property of the firm.
 
Quote from sweet&tasty:

If you leave a prop firm what right does that firm have to use your trading account after you have left. If someone else used your account and lost money could you be liable....and if they made money in that account could you be liable for taxes on that profit.

Are there SEC regulations against using someone elses account? There must be for firms like Bright or Tuco where a person funds that account with their own money....but what about at firms like Swifttrade or Title where a person doenst use their own money?
More...

OK, well I guess you haven't spoken to anyone here (at least). When a trader leaves, he takes whatever is in his/her account with them...why wouldn't that happen? If you leave, you no longer have an account. We ask for a 30 day notice to be sure everything has settled and all data feeds have been shut off, but then the check goes off to you.

If you don't have your own money up, or accumulated, than I guess those other types of firms would just turn off your account number and keep whatever is in there for their main account.

(I may be missing something in your question, if so, please clarify).

Don
 
Quote from Don Bright:

If you don't have your own money up, or accumulated, than I guess those other types of firms would just turn off your account number and keep whatever is in there for their main account.

(I may be missing something in your question, if so, please clarify).

Don
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What my concern is that I use to trade at a well known prop firm where i didnt have to put up any money. I left that company and found out later that my old boss was in fact using my account (he was doing this so that he could keep a higher % and pay his "boss" a lower % because i had traded that account to a higher % payout). Now i couldnt care less if they trade this account except that account is in my name. Soon after i left i got a letter from revenue canada wanting me to tell them where i got last years trading income....the name of the company and their business number. Now i declared all my income like a good citizen but what im worried about is if revenue canada asks this company for what i got paid in 2007 they will give them the records of the account in my name which has at least an extra 50k in it that i didnt got get paid for.

Now obvioulsy i can prove i didnt trade for them when this extra money was incurred but as if revenue canada will take my word for it right off the bat. i would have to go out of my way to prove that i reported my actual income from this company and even then i will probably have issues with revenue canada from then on.
 
Quote from sweet&tasty:

What my concern is that I use to trade at a well known prop firm where i didnt have to put up any money. I left that company and found out later that my old boss was in fact using my account (he was doing this so that he could keep a higher % and pay his "boss" a lower % because i had traded that account to a higher % payout). Now i couldnt care less if they trade this account except that account is in my name. Soon after i left i got a letter from revenue canada wanting me to tell them where i got last years trading income....the name of the company and their business number. Now i declared all my income like a good citizen but what im worried about is if revenue canada asks this company for what i got paid in 2007 they will give them the records of the account in my name which has at least an extra 50k in it that i didnt got get paid for.

Now obvioulsy i can prove i didnt trade for them when this extra money was incurred but as if revenue canada will take my word for it right off the bat. i would have to go out of my way to prove that i reported my actual income from this company and even then i will probably have issues with revenue canada from then on.
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That's simply a tax issue, which I can't really address. I suggest calling Peter Beck or his accountants and advise them of the letter you received. (I assume Swift, if not, call the accountants for the firm).

All the best,

Don
 
to me, being responsible for taxes that you didn't earn income on means that someone else is getting way with tax evasion and possibly fraud.
 
Just get your old boss to give you a letter stating the date you left. I can't see how it would be tax fraud as certainly the company is declaring that income rather than you. I don't know about Revenue Canada but this would likely satisfy the IRS. If it ever went into a forensic audit anyways you would be fine.

It could be an inconvenience but nothing more than that unless you had something offshore....then things could get more complicated but you stated you have declared all your taxes so i wouldn't sweat it.
 
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