Hi, everyone As of 2024, what are the limitations for that type of account? Can I manage a friends 1M USD account if mine its 50k? How do I demonstrate the friendship with this person? Have a nice day!
Last I recall, which was years ago, many states had a de minimus exception to registering and you could have less than 6 (12?) clients before dealing with that. Each state is different tho so check yours. the assets don’t matter until you hit some higher limits where the total may also require state or national registration (ie $100m, maybe less for your state). you don’t have to be friends but you do need to get them to sign a trading authorization for you to trade legally for their account. Each broker has a form for this. the main thing with avoiding headaches involving managing other people’s money is to not lose money. There are lots of rules, but no one complains as long as you’re helping them get rich.
Years ago when this possibly applied to me.. the exemption limits were 15 customers (friends/family) and $1 Million total assets. Likely limits have have changed over the years, so check with NFA. Be prepared to defend your inclusion of investors as "friend/family". GL
Thanks Im seeing NFA is a regulator for derivatives and I only trade stocks. When you say "be prepare" can you be more specifics? Any tips for this?
Not just the NFA, but also FINRA. You might tempted to try to include some investor with a big account who doesn't qualify as "friend/family".. just be ready to justify those investors (if any) as friend or family. I had 6 routine regulatory audits way back when... they can be as picky as they wanna be.... Big PITA... but they want to assure that you're in complicance with regs and not ripping anybody off.
Building a client base is difficult as an independent and without institutional sponsorship. My advice is always tell the whole truth.. no exaggerations/ommissions. If your performance is big enough for long enough you will attract a following. GL