Running Money without Regulation

S

SoCalOptionsWriter

Maybe I'm dreaming, but is there a state where it is possible to solicit U.S. funds to manage without getting a Series 7 or 3? (Both futures and equities would be traded.) Caveats? Asteriks? What about a low-cost, low-tax country?
 
It's illegal everywhere on this planet.

Even if you do it hush-hush with some friends, if something goes wrong and you lose some of their money, they could sue you and at that point you will be in serious trouble and deeply regret acting like an outlaw.

Taking a Series 3 or 7 is not a big deal, just study for a couple of months and you will pass the exam.

Alternatively, see if you can partner up with someone that has a Series 3 and/or 7 and they will operate for you the part of the business that requires having a license (i.e. raising capital, doing pitches to investors, soliciting, etc.).
 
I am going to add this: there are some exceptions with the NFA to run funds unregistered with the CFTC (I suggest you find a US lawyer to explain you in deep the caveats, but you may start to find some info on the internet for free), however it's a bit of a minefield and you can't really scale, you will be very limited in scope and what you can do, certainly you cannot go around and solicit investors in the US.

If you go to Cayman Islands, you may be able to set up a private fund with no license, as long as you have maybe 10 investors (I can't recall exactly the law now, but a lawyer could help you with that), but again it's expensive to set up in the Cayman and you will not be able to scale an un-licensed private fund, so in the end of the day, it may not be worth it.

If you want to raise capital and operate normally, you MUST be regulated, there is no way around it.
 
SoCalOptionsWriter said:
Maybe I'm dreaming, but is there a state where it is possible to solicit U.S. funds to manage without getting a Series 7 or 3? (Both futures and equities would be traded.) Caveats? Asteriks? What about a low-cost, low-tax country?
More...

1. If you deal with US customers, US securities law applies... regardless of your domicile.

2. "Exemption from registration" when it applies is very limited and applies to only "friends, family, and those with whom you already have a relationship"... and a small total $$$ of funds. That is, you are not allowed to "hold yourself out" (as managing money) to the public/solicit funds unless registered.

Compliance with regulations is quite the pain if you really want to "be in the business". To make "running money" worthwhile, you probably need to be able to raise "enough" quickly to be able to afford the costs of compliance. The SEC once told me that threshold was $50MM.
 
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Yeah, I'm thinking about it with only two or three mil, and I just can't afford the paperwork, compliance, etc. Shame. Makes me want to look abroad. I'm in Lisbon at the moment, and it seems quite livable.
 
There are platforms for emerging managers that try to offer you a set up at a reasonable cost, AKJ in the UK is one, but there are others, you have to do some digging online or ask around...
 
i think i may be able to help you. a reg D exemption and some CYA docs should do the trick. what specifically are you wanting to do? setting up in Delaware or Wyoming is optimal, but should work in most states. we can connect if you like about it.
 
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