Trading On Behalf of Others

N

Norm

Hello Everyone,

I have been trading successfully for about two years now. I am considering trading on behalf of a small group of investors.

Can anyone point me in the direction of material that explains the in and outs of trading on behalf of others. I am particularly interested in the legal aspects of doing this.

Norm
 
Quote from Norm:

Hello Everyone,

I have been trading successfully for about two years now. I am considering trading on behalf of a small group of investors.

Can anyone point me in the direction of material that explains the in and outs of trading on behalf of others. I am particularly interested in the legal aspects of doing this.

Norm
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i recommend that you just use the ib fa account in the beginning. since you never take control of the money you eliminate a lot of legal hassles. if things work out you can always go the fund route later.
 
Quote from vhehn:
since you never take control of the money you eliminate a lot of legal hassles
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Series 7 and Series 63 securities examinations are not much of a hassel :)
 
Hi Norm,

That's great that you have been successful in trading. In futures (if that is what you are trading?), you can legally trade up to 15 accounts per calendar year without being licensed and registered as a CTA. You would need to be listed as Power of Attorney over the accounts.
 
Good question - especially about the legal aspect. It might benefit you to google "Private Placement" in regards to investing other people's money. These are the rules/laws that divide the regulated mutual funds from the unregulated private equity and hedge funds.

Also, congrats on getting to where you are! I wish you the best success :)
 
Congratulations on your success.

One factor to be sure and consider are the tax implications. I trade for a friend in parallel with mine through IB. He opened the account and granted me access ("Family & Friends" account). This way he gets all of the tax ups and downs for trading. Obviously a big trust factor. Does carry a hassle-factor, but they all do.

On another one, I have a Corp for a consulting business and set up an LLC with a trading account with the Corp as the manager of it. All expenses can be reimbursed up through the Corp. To avoid registration/regulatory issues by the Corp for charging a management fee, it was given a % of the business and all members share in the profits/losses/tax impacts. My state has some quirks that necessitate this approach and I don't want to be a foreign business in the state (e.g. incorporate/register in Nevada).

Mileage may vary. Be sure and check out through competent tax & legal folks, which I'm not.
 
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