Corporate account (Legal Question)

Discussion in 'Prop Firms' started by ColdLogic, Sep 22, 2003.

  1. Here's the situation... I'm a professional trader in Texas, trading my own retail account. My brother is a lawyer in Colorado. He wants to open an account with a prop firm in his corporate name, and trade the account with my help.

    He says it's important (for tax reasons) for the prop firm account to be under his corporate name, rather than his personal name.

    Can this be done?

    What other legal considerations should we be aware of?

    Thanks in advance for any and all suggestions.
  2. Are you a registered investment adviser in Tx?

    Will you be charging a fee?

    In Tx. if you advise even one person (Corp is person) as I understand it and charge a fee, you must be registered.

    I do not think TX has any loopholes. I'm from Tx and want to set up a small account for family and friends and charge, but have not done so due to this rule.

  3. I won't be charging a fee.

    My question primarily involves his end... can he open an account with a prop firm in a corporate name?
  4. Its important to not get caught up in semantics here....I may be wrong but it doesn't sound like a true PROP acct....a true Prop account is when you go to a firm and they give you their NASD member $$ to trade....many firms set up LLC's and let you trade a percentage of it and loosely term it 'Prop", yet if you lose $$ they take it out of your end....If your brother is putting up his own $$ then he can open it up as he wants and let you trade it ...however if he is opening up the acct and getting leverage from an LLC, they may not allow him to do far as legal considerations, if you are trading it for him and getting a % of the profits, you may have to be registered at least a 65 in Tx...other states allow you to avoid this if there are less then 25 million in assets and X amount of investors....
  5. CalTrader

    CalTrader Guest

    Only what others have said: Texas has the most onerous registration requirements in the nation for several types of professionals. For example, none of my companies do business in Texas. We have walked away from business there due to some of these arcane rules that would apply to some types of business. In my opinion these are largely constructed to extract dollars from small entities and have little to do with any stated high and mighty purpose.

    Check the regulations carefully before starting. For most of my businesses we simply leave the bad business in texas for others .....