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

As soon as there is a problem (and there will be) the SEC/NFA will quickly find out about the 'problem'.

 

Where are you going to claim the 20% income from the friends and family account? If you don't include it then you are committing fraud. Also, I am not 100% sure about this but I think the fees that your clients pay you are tax deductible. So if they claim a deduction and you don't show any income from that then that is a problem.

Eric

 

The amount is not the issue.

Here are the main issues:

1) Are you getting compensation for the management?

2) Are you holding yourself out to the public as an investment adviser?

3) Number of clients.

4) What state you are located in.

5) The states your clients are located in.

 

You are right if he is trading stocks only then the amounts don't matter. However, if he is trading futures too then the amount does matter.

Here is a link to the NFA website

http://www.nfa.futures.org/registration/cpo.asp

So the question is what are you trading?

stocks, futures, both

 

And if you are managing currency accounts via cash forex, no registration is required in most cases.

 

I think your comment is misleading. If you're managing money and taking a fee, you still need to consider the registration requirements -- whether it's currencies, futures, stocks, bonds, etc. Even if you're using currencies, you would still need to consider the Registered Investment Adviser laws.

 

What constitute management?
if one is not directly managing your money, do one need to register?

Eg.

Instead of you giving me your money and i trade/invest it, I tell you what to trade/invest and you do the trading yourself?

Such as those selling newsletter subscriptions... They are giving advice to the public

 

Sorry, just noticed your reply. The RIA regulations don't apply to investment advisers with less than $25 Million in AUM invested in securities. There are a number of other exemptions and prohibitions from registration as well. An overview may be found on the SEC website, with links to more details.

An SEC-exempt investment adviser of securities may or may not need to register with one or more states. A few phone calls or emails should be all it takes to determine if that's applicable to you; see the section called "State-Registered Advisers" on the above SEC page.

The NFA has its own registration requirements and exemptions for different categories, with respect to futures contracts or commodity options. For example, as you can see under the "CTA" category:

"Registration is required unless:

1. You have provided advice to 15 or fewer persons during the past 12 months and do not generally hold yourself out to the public as a CTA..."

You want a real-life example? I personally researched whether a multi-billion dollar currency-only hedge fund I was working at had to be registered as a CTA. The clear conclusion was "No." I then drafted a formal reply, it was signed by the #2 guy and sent off. (That was a few years ago; it's possible that regulations have changed, although I seriously doubt it.)

I'm currently managing small OPM and, after researching it extensively, concluded that I did not -- and, moreover, could not -- register. That's a shame... who doesn't love extra paperwork and fees?

The bottom line is this:

- Cash forex (both spot and forward contracts) are considered neither securities nor futures contracts under US law.

- This thread is called, after all, "Do you have to be registered to manage other people's money?"

- That's why I wrote "And if you are managing currency accounts via cash forex, no registration is required in most cases." That applies to just about any cash forex trader or manager who could conceivably be using this thread to answer the title question for themselves.

- For asset classes other than cash forex, the above SEC and NFA links would be a good jump-off point.

I hope this clarifies it. For the vast majority of private would-be managers the question "So, do I need to register or what?" is not a particularly complicated one, at least in the US. Cheers.

 

Is taking the series 7 to be a broker as hard as people say it is?...Im going down to Scottrade office tomorrow and see what they say.

side note: - I'm trying to find a real job sinse I cant make it as a full time trader. And at the moment, being a broker is the only thing that is of interest..so far. Good money for the successful ones, so I herd.

cm

 

Can a registered (with NFA/CFTC) CTA who locates in State-A in US:

1. Put out ad in the States other than State-A?

2. Take Clients from the States other than State-A?

3. Take Clients from the countires other than US?