A fee per trade may not be charged for clients inside the US (or US protectorates) by the advisor of hedge fund ( Not talking about soft dollars here ). Hedge funds have different structures including master/feeder setups where fee per trade may be charged offshore and rolled into the return on the US side in the return of the fund. A single hedge fund can be made up of more than one entity and located in more than one jurisdiction, so your mileage may vary.
Commission-recapture arrangements do not pose the same potential for conflicts of interest because the rebated commissions directly benefit, and are the property of, the client, not the adviser. Thereafter, the use of the rebated commissions is subject to the same limitations as the client's cash is generally and the use of those rebated commissions is as transparent as any other cash expense of the client. <b>Most importantly, commission-recapture programs are dissimilar from soft dollars in that they are outside the scope of the safe harbor: recaptured commissions are hard dollars, not services or credits for services.</b> Explained here http://www.publicpensionsonline.com/members/images/LJRprofile.pdf The money goes back into the fund to pay salaries or cunsultant fees.
Yes I understand, but the commisions CANNOT flow from the client to the LLC owner. If you bring in partners and call them Class B members of your LLC and that money flows back to the class A partners, that won't work. If you are talking about setting up an entity with one or two other guys and making them all managing partners, that could work. But again I have to ask, why on earth would you do that? I'm not trying to be difficult here, but no one is going to do that.
mav, you could set up an llc like a hedgefund and payout 75%,make money on commissions but not take a deposit but take a training fee. a firm in california does this and everyone is happy.
You aren't using enough imagination here. But I am not loking to get into an argument about it. Just saying if a fund didn't take deposits from traders and only the fund's capital is at risk there is a legal way to structure it to the liking of both the traders and the owners. But most LLC's aren't going to take all the risk so it isn't a viable solution.
So any guy or group that was running a sub-llc off Assent will now have to just go back to trading prop for themselves (to make themselves decent money), and maybe make some money off the traders in THEIR location off a desk fee? Sound right - no more LEGAL opportunity to make any hits off the commissions charged to the prop traders from Assent the ACTUAL B/D (for the traders in your office that used to be under your sub-llc off Assent?). Desk fees, training fees, and or profit splits seem to be the only way for a Sub-llc to make ANY money off the traders in their office now to cover the costs of that office (and make a profit if any for that location). ***So, how about a monthly "floating" profit split equal to what would have been the monthly commission overide on a per trader basis. wink, wink I mean, how in the hell is the guy running the office suppose to make any money now off his traders he is providing a roof for - seems messed up imo. Great job SEC, NOT!