Gentlemen: Please read this with a patient and open mind. Not sure if this should go under Resources but I'd like to propose something for traders/investors/money managers to critique. When it comes to money management, the SEC, with its wild regulatory enforcement schemes of (and penalites for) breaking rules only THEY can interpret for their own advantages (read $) has basically made it impossible to effectively run money (trade money besides your own) and stay within the 'compliance' boundaries of the SEC/NASD and other gov. regulatory agencies established to punish the evil-doers. I think I've got a better way. To simply and legally bypass the "regulators" and do what WE want to do. Private traders trading their own money can do anything, in any market at any time, and NEVER have to supply ANY government regulators with Jack squat when it comes to compliance of any rules. Except paying taxes on their profits, of course. How is this regulation-avoidance done? Follow along... The markets were designed and set-up for free, unrestricted trade amongst people who were willing to trade their money with others in an open 'marketplace'. The SEC has overly-complicated this process and overstepped its bounds into our personal lives and private choices for us to select the means for our personal profiting. 1. A trader (private or otherwise) and an investor (this can pretty much be anyone who is not directly legally responsible for public funds, per say) open a Joint account at a trading brokerage (either a forex or equities brokerage). 2. This joint account is placed under the management of a big firm such as Smith Barney (SB) - they are responsible for money deposits and payouts (dispersals). SB is entered into the picture so that neither joint account holder has access to the the actual money (to withdraw it or transfer it out of the trading account). SB would probably charge 1% for their 'adminstration' fees. a "double-blind" system What is the motivation of a good trader to have someone looking over his shoulder and seeing his trading system in action? Nothing. No good trader wants his system compromised. Therefore it is essential to protect his system from the prying eyes of others (namely rich "investors"). This can ONLY be done if the trader has the password and log-in access to the trading account ONLY. The second part of the 'double blind' system is that ONLY the trader sees his trades that he himself makes, as a professional trader trained to competently make profits in the open markets. What does the "investor" get? Monthly or quarterly statements sent to him by Smith Barney. The investor gets something else. Based on a private agreement written up between the trader and the investor before the account is opened, the profit splits would be spelled out. I'd even go as far as suggesting a requirment of a "lock-up" period for the funds so that it is fully understood to non-trading, piquancy investors that their money is going to traded and untouched (read no "redemptions") for a period of time agreed upon by the trader and the investor(s) - a one to two year period. I am not talking about 'pooled' money. Let's face it. The gov. regulatory bodies have their heads up their asses. Here's why. They don't care if ANYONE loses their money in the markets. They don't care if you "invest" your money in a mutual fund that happens to slide 20% a year. That's still a loss for "investors" - and a major one (read the trillions of investors' dollars lost in the 2000 bear market due to mutual funds losing their shirts, with the SEC's cheerful approval). They don't care if you enter the forex and get 100% of your money smoked. That is all fine with them. But, if you prefer to put your money under the "management" of a professional, market-seasoned trader, then all Hell breaks loose with them. They get all bitched out and up tight, playing 'God' with all their 100s of self-interpreting compliances/regulations "to save the investors' skin." That sucks. And it doesn't make any sense. Therefore, I propose that the self-serving SEC simply be bypassed by traders and investors doing business with each other. If you have any comments to make (other than cheap flames) I would like members to post. Because, as an expert in weighing risks and probabilities (I trade the forex in my own private account), I see how unfair and stacked one-sided regulatory agencies have it for their own benefits and not for those of investors and traders. I think this is an idea whose time has come. Thank you. sKaLpZ
...sympathize w some of the above re regulators going overboard etc particularly in the US, however as u say yrself yr scheme wld require willing investors who r prepared to trust u blindly and r ok with a 2-yr lock-in etc, also not sure how workable it is if u have 10+ investors for instance, to what extent SB will be comfortable with the whole scheme (e.g. what happens if u pass away, any litigation-type situation etc)? am sure u wld have checked with them already, just asking FWIW, i get my clients to open individual accts directly with a non-US based broker (previously Swiss-based, in the process of moving all accts over to UK-based broker), clients give me a PoA to trade on their behalf, the broker provides me with (access to) standard block trading functionality, then takes care of P&L allocations on a client margin equity weightings-basis at COB everyday, just as if i were trading a pooled acct, except i'm not, i am just using my broker's credit lines, therefore no unnecessary regulatory complications. No taxation of anything, my rebates and perf. fees r paid into a HK acct (can open online w Citibank HK branch for instance, they r just a local entity, no reporting obligations whatsoever to US IRS etc fyi, although as a non-US citizen/resident thats not an issue for me anyway), clients can do the same if they want to... they can also check (read-only) their acct real-time at all times, as well as transaction history etc (i cld block that, but i prefer to offer transparency just for peace of mind), deposit/withdraw monies anytime (1-day notice) via simple fax request to broker... hope this is useful, cheers