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Old Dec 6th, 2008, 10:22 AM   #1
IWT2008
 
 
Join Date: Mar 2008
Posts: 33
Putting together a small (100k) account/fund for trading equities.

My money as well as a few close friends and family members.

Probably will be formed as an LLC or LP (not sure yet)

If they wanted to pay me a small percentage of profits would I need a license (7, 65, 63, ???)

At what point is a license required???

Thanks for the help
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Old Dec 6th, 2008, 10:47 AM   #2
joemiami
 
 
Join Date: Mar 2005
Location: Southbeach, Miami FL
Posts: 245
Typically, you need a license if you are trading for other people no matter how much they are paying you. The best way to avoid needing a license is forming a joint partnership or LLC based trading account "WITH" the other person. So basically you two are "in business together". I first formed a legal aggreement between him and I as to how "we" will split the profit(in my case I get 30%). He puts up the money, and I do the trading. I have 8 diferent joint partnership accounts with people this way....

Do you have a proven profitability track record?...just curious.
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Old Dec 6th, 2008, 10:56 AM   #3
Free Thinker
 
 
Join Date: Nov 1999
Posts: 14,316
Quote:
Quote from IWT2008:

Putting together a small (100k) account/fund for trading equities.

My money as well as a few close friends and family members.

Probably will be formed as an LLC or LP (not sure yet)

If they wanted to pay me a small percentage of profits would I need a license (7, 65, 63, ???)

At what point is a license required???

Thanks for the help
if you use the ib friends and family advisor account no license or paperwork is required. it is the best option for small funds starting out.
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Old Dec 6th, 2008, 11:02 AM   #4
joemiami
 
 
Join Date: Mar 2005
Location: Southbeach, Miami FL
Posts: 245
vhehn, I believe that IB lets you do that bcuz they are not responsible for the fact that your "friend " is paying you to make money for him, then you are working in the capacity as a paid trading advisor(thus requiring a license); and that oversight of making sure its exercised within the law is YOUR responsibility and is enforced by FED regulators, not IB.

The best way to circumvent a big legal can of worms is form an LLC partnership account with that person and trade that way. This was the way I was instructed by my attorney.
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Old Dec 6th, 2008, 11:11 AM   #5
Free Thinker
 
 
Join Date: Nov 1999
Posts: 14,316
Quote:
Quote from joemiami:

vhehn, I believe that IB lets you do that bcuz they are not responsible for the fact that your "friend " is paying you to make money for him, then you are working in the capacity as a paid trading advisor(thus requiring a license); and that oversight of making sure its exercised within the law is YOUR responsibility and is enforced by FED regulators, not IB.
depends on the state. most states dont require anything up to about 15 clients as long as you dont take control of the money.
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Old Dec 6th, 2008, 11:13 AM   #6
joemiami
 
 
Join Date: Mar 2005
Location: Southbeach, Miami FL
Posts: 245
vhehn, if its a small number of accts you're managing, you may be right(in some states). Im going to check the state and federal laws, im very curious about this.

I did the "joint partnership" account to better safeguard my payout at end of the yr.
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