Do you have to be registered to manage other people's money?

Discussion in 'Professional Trading' started by ginux, Apr 10, 2007.

  1. ginux


    Assuming the total managed amount is very little. Less than USD 5 million.

    Do you need to register?

    PS. Refering to US regulations.
  2. lindq


    No, you don't. So long as you are not describing yourself as a money manager, fund manager, professional advisor, etc, and keep it to close friends and family.

    If you move beyond that, you need to check with state regulations as they will impact you before SEC regulations do. Most states are similar, and describe what your limitations are in terms of amounts you are managing, compensation, etc. etc. And a conversation at that point with a good securities lawyer is advised.
  3. ginux


    what are the prerequisites to being registered?

    Degree? Etc.
  4. LeroyB3


    You have to pass NASD exams.


  5. Depends on what you are trading. For stocks, check the sec website. For futures, check the NFA website.

    You will want to be covered so due your homework.
  6. There's a $$ limit, even for "family and friends"... and I believe it's waaaayyyy below $5 Million. (??)
  7. The answer is yes and no.

    Futures: You can be a CPO commodity pool operator and not have to register with the NFA if you have less than 15 clients and your total under assets are under $400k. If you do have to register then you must pass the Series 3 and do a bunch of regulatory paperwork.

    Stocks: If assests under mgt are under $25 million then you don't need to register with the SEC. However, you may or may not have to register with your state administrator. For example, I live in WV if I am COMPENSATED for being an advisor then I must register in WV no matter where my clients are located. If my clients are in California and I am here in WV then I can register in WV and not CA (if the number of clients are less than 5 in CA). This is called a deminimus exemption and most states have them. However, if you are lucky enough to live in a state that only requires you to register if you have over a certain amount of clients in that state even if you live in that state then you don't have to register. I think CT is one that comes to mind. Probably why so many hedge funds are located there.

    So the bottom line is you need to call your state administrator to check and see what you need to do.

    Here is a helpful link from IB
  8. the primary issue is if u accept compensation. in most states i am aware of, no matter how small the accounts, you must register/pass tests, if you are accepting compensation for management
  9. uhh question..HOW is the sec going to know that your trading someone elses money???...

    1) friend /family gives you check
    2) put check in bank
    3) write a personal check to broker
    4) make 20% a year and keep it top secret :p
  10. 5) you pay taxes on trading gains from friend/family account
    #10     Apr 12, 2007