Trading a family member's personal account, question

[N4Apound]

Suppose a family member says:
"Here's my login info, make some trades in my personal brokerage account for me. Purely as a favor with absolutely no compensation at all and no liability."

Let's immediately stipulate at the outset that it is very likely not WISE to do so for any number of reasons, such as family member getting big mad when I blow up their account, claiming theft of password and suing, etc.

But is there any Federal/State legal or other regulatory consideration that you are aware of? Aware of any brokerage's rule that would be violated?

Also given that I am not a professional, am unlicensed, and not presenting myself as in the business of being an advisor.

 

[Overnight]

Suppose a family member says:
"Here's my login info, make some trades in my personal brokerage account for me. Purely as a favor with absolutely no compensation at all and no liability."

Let's immediately stipulate at the outset that it is very likely not WISE to do so for any number of reasons, such as family member getting big mad when I blow up their account, claiming theft of password and suing, etc.

But is there any Federal/State legal or other regulatory consideration that you are aware of? Aware of any brokerage's rule that would be violated?

Also given that I am not a professional, am unlicensed, and not presenting myself as in the business of being an advisor.

In the USA, it is against all law, and if caught you'll get thrown in jail (or should). Nice click-bait.

I know IB will cancel you, AMP will cancel you. I am sure many other brokers will instantly terminate your accounts, if they get privy to your motions that is.

 

[Relentless]

Suppose a family member says:
"Here's my login info, make some trades in my personal brokerage account for me. Purely as a favor with absolutely no compensation at all and no liability."

Let's immediately stipulate at the outset that it is very likely not WISE to do so for any number of reasons, such as family member getting big mad when I blow up their account, claiming theft of password and suing, etc.

But is there any Federal/State legal or other regulatory consideration that you are aware of? Aware of any brokerage's rule that would be violated?

Also given that I am not a professional, am unlicensed, and not presenting myself as in the business of being an advisor.

Just show them how to buy something like the SPY or S&P500 index fund. Tell them to use XYZ % of every paycheck towards it - and tell them to put 2x that or as much as possible when the market sells off hard.

Unless you think you can beat those returns (highly unlikely) this makes things simple...

 

[d08]

Suppose a family member says:
"Here's my login info, make some trades in my personal brokerage account for me. Purely as a favor with absolutely no compensation at all and no liability."

Let's immediately stipulate at the outset that it is very likely not WISE to do so for any number of reasons, such as family member getting big mad when I blow up their account, claiming theft of password and suing, etc.

But is there any Federal/State legal or other regulatory consideration that you are aware of? Aware of any brokerage's rule that would be violated?

Also given that I am not a professional, am unlicensed, and not presenting myself as in the business of being an advisor.

This has been discussed before. The account will be frozen if they find out, no questions will be asked, anti-money laundering regulations. Yes, if you never admit to the broker or anyone else and the actual account holder knows about what's going on in the account, you can get away with it, illegal or not.

 

[lpope]

Most brokers have a power of attorney type form that the account owner can submit which allows you to legally trade the account.

 

[JSOP]

Suppose a family member says:
"Here's my login info, make some trades in my personal brokerage account for me. Purely as a favor with absolutely no compensation at all and no liability."

Let's immediately stipulate at the outset that it is very likely not WISE to do so for any number of reasons, such as family member getting big mad when I blow up their account, claiming theft of password and suing, etc.

But is there any Federal/State legal or other regulatory consideration that you are aware of? Aware of any brokerage's rule that would be violated?

Also given that I am not a professional, am unlicensed, and not presenting myself as in the business of being an advisor.

I don't see any violation of any laws as this is purely a private agreement between two parties authorizing one to access the personal account of another to trade on behalf of the other person. It's none of any federal or state or anybody's business what this family member has authorized you to do with his/her personal account. It's his/her personal account. He/she can damn do whatever he/she wants. Anti-money laundering rules only stipulates that the source of fund to fund the account has to come from another account bearing the same name as the brokerage account but it or any brokerage agreement never dictated that it has to the person who holds the account to do all of the trading.

The only thing is if you want your a$$ covered, you need to have his/her this family member's instructions to be in writing, in a legal document with all the disclaimers, caveats, fine prints, and everything included, signed by the authorizing party, witnessed and certified or notarized by a lawyer in a form of Power of Attorney showing clearly what you are and are not authorized to do with this family member's account and consequences of what can happen if any scenarios happen. That way, if anything happens, you have a bona fide legal document to protect yourself in a court of law if anything happens.

 

[levanyashin]

Maybe have him give you a notarized and stamped power of attorney document ,stating that this individual can buy/sell securities for me via phone or internet. You might wanna contact your broker and ask. This is a sensitive issue

 

[Damanuelman]

I don't see any violation of any laws as this is purely a private agreement between two parties authorizing one to access the personal account of another to trade on behalf of the other person. It's none of any federal or state or anybody's business what this family member has authorized you to do with his/her personal account. It's his/her personal account. He/she can damn do whatever he/she wants. Anti-money laundering rules only stipulates that the source of fund to fund the account has to come from another account bearing the same name as the brokerage account but it or any brokerage agreement never dictated that it has to the person who holds the account to do all of the trading.

The only thing is if you want your a$$ covered, you need to have his/her this family member's instructions to be in writing, in a legal document with all the disclaimers, caveats, fine prints, and everything included, signed by the authorizing party, witnessed and certified or notarized by a lawyer in a form of Power of Attorney showing clearly what you are and are not authorized to do with this family member's account and consequences of what can happen if any scenarios happen. That way, if anything happens, you have a bona fide legal document to protect yourself in a court of law if anything happens.

Bona Fide means in Good Faith right?

 

[N4Apound]

...(you should) get thrown in jail

That seems a little... insane.
But perhaps you misunderstood the hypothetical. Absolutely no money would be changing hands and absolutely nothing nefarious or underhanded would be going on. The proposed scenario is not a cover for anything else.

 

[N4Apound]

Thanks for the replies.

I'm not doing this currently, and based on the replies, I think the answer for me is that I would discuss with my broker before doing so, just to be as absolutely above-board as possible. And probably have a written agreement as well.

I guess an alternative would be to go through a 3rd party such as collective2 so that the family member's account would auto-trade my signals. But that would be a relatively painful way to accomplish what would amount to exactly the same thing.