I can just imagine how many people are now using all their freeeee margin on their new trading accounts as if they think stocks only go up, because when they get those margin calls and need to liquidate positions and add more cash to their accounts it's going to be one fu$k of a ride down.
Using an LLC to protect oneself from a margin call?
- Thread starter kevinwork24
- Start date
I had the same experience as @d08, not classified as a pro, and no higher data fees.
It was a US broker and he asked copies of the documents about the company and also proof that I was managing director and had a POA to trade the account. So the broker knew very well it was a company. I did however trade only my own money in that company. Money for the trading account came from a bankaccount owned by my company.
interesting. that was technically against the rules according to FINRA. any entity that is not a "natural person" is automatically classified as professional
Yes, my data fees were higher. But this was before the recent hikes in fees.
I'm talking about the issue of the topic though.
Why is it a gravy-train? I wasn't planning to stick my losses to the broker. The structure didn't make sense as the situation changed.
If people want to judge or are questioning something, the first thing they need is ALL the information needed to make a correct judgement. And that information was only available for @d08.
I stopped a similar construction as conditions changed and there was another, better, solution. Things (your situation, or the situation in the country where the LLC is, or the situation somewhere else that becomes better, etc...) change all the time, situations are dynamic, not static.
It's not too difficult to pierce the corporate veil of an LLC if you're not very careful about both how you set it up and how you run it. The protection the OP seeks may be somewhat illusory if they ever actually get into a situation where their LLC's account goes negative. And the legal costs to defend yourself may be far greater than the loss.
You have to look the exchange rules for example in CME you can trade futures from a LLC under non-professional status if it's small business entity.
People love to hate on a good bull market.