As an FYI, I'm located in Canada, so this question may have different implications in the US. Two scenarios: Person X is a plumber who discovered that the stock market behaves the same way as leaking pipes (just imagine it). Person X has no certifications/liscences to trade, but knows he can make some money in the stock market with his 'leaking pipe theory'. 1) Person X get a $25,000 loan from a bank. Person X uses that money to trade. 2) A buddy gives Person X $25,000 to trade, Person X aggrees give his buddy 60% of the profits. From what I understand, case 1 is legal, case 2 is illegal. The reasoning is that without liscencing/registration, Person X cannot take other people's money and trade securities on their behalf (which is pretty much was case 2 is). But, if person X took a loan from his buddy, this would *seem* to be legal, (but shady), because the interest rate could be *wink wink* modified if there were such a clause in the contract, and the loan could be *wink wink* forgiven if the loan is lost. Could anyone elighten me on this subject? I'm interested in these issues, I've started reading about it, but I'd like some feedback from people in the field. I have a couple of friends want to give me some money to trade for them, but I don't think I can do this without the appropriate certification. Am I right? Regards, Brandon
I think your case 1 should also be illegal. Most banks will not let you borrow money and use it for speculation and investment imo
Loans from banks for investments are OK. Mind you, it might be much harder to get a loan for investing as opposed to buying a boat... I've included a link to an online loan application form at Royal Bank. https://www.rbcroyalbank.com/cgi-bin/personalloans/loan.pl If you look at the "Purpose" drop down menu, you will see a section for investments: stocks, bonds, CSB, RRSP. Regards, Brandon
McCloudy: What are you talking about? I can borrow money from any financial institution with good credit, as long as I make timely payments of P and I, I can finance anything I want . Why do people post for the sake of seeing their name on here? I walked into a bank and borrowed 25K for trading.