Discretionary Day-Trading a client account and charging a commission? I know it used to be done a bit more back in the roaring late 90's, but I never see it posted around here. Let's say someone gives you $100k because he knows you have been a pretty good trader over the years. You then trade it like crazy with say a 1 cent over-ride on the commission deal you can work out with your broker-dealer. And let's say his account returns 50-100% for the year. He would be ecstatic, no? Would it matter that I as a broker rang up the register and collected $100k or even $1M, as long as his performance is way above market returns? I know this assumes excellent performance, but in looking for alternative ways for guaranteed money (in commish), and as long as the client understands that this is a "trading" and not an investment account, can't this work?? I would be interested in hearing responses. I know churning will be the key word dicussed.
Whenever the commissions in an account are excessive, it draws the attention (and likely ire) of the regulators. Suggest you tread lightly.
I guess my question is, how would regulators become aware of this? It would only be if the client reports you right? or would the broker/dealer do something? I know paperwork would be signed by the client indicating that he understands this is day-trading, it is risky, and commissions will be high etc. So if it is understood and in writing, is there much to worry about other than a pissed-off client? I don't really know the answer, so I am just looking for opinions.