Other peoples money

Discussion in 'Trading' started by jeffly, Jul 22, 2009.

  1. jeffly


    I trade Gold futures for myself. If someone else wants to give me 50K to add to my account to trade with are there any compliance issues I have to deal with such as being registered. They can handle the tax side of it.
  2. dealmaker


    With only $50k you will have a bunch of issues here are 3

    1) you will need series 3

    2) in addition you will need one or more state administered exam depending in which state you are in eg series 55 and 66

    3) the rules of the firm you are trading with allows you to trade other peoples money.
  3. Can you have this person also give me 10k so I can make some money trading stocks?
  4. jeffly


    I was registered with a 3, 24, 7, and 66 at a firm. I left the firm and trade with my own money now. I do not need to be registered to trade with my own money. Your saying if I accept any outside money I have to have my licences somewhere?
  5. You could open a "family and friends" account at Interactivebrokers. Keep the other person's account segregated from yours, but you can trade your account and the other account at the same time. Keep separate accounts so that the gains you make for your friend are reported as taxable income for them and even though your do the trading in the account, they have acccess to the account to transfer in and out etc... and see reports.
  6. If you take other people's money to trade commodities, you have to comply with the rules of the CFTC.

    You may or may not need a license, but when you take other people's money, you must establish an entity - a trading partnership. You will need a PPM, an operating agreement and subscription documents. Which means you will need a lawyer. The lawyer will tell you what you need to comply with CFTC regulations.
  7. One more thing....

    You're going to want to make sure you only take money from "qualified investors" - people with at least $1MM net worth or incomes exceeding $200K annually.

    If you don't take only qualified investors and you don't have a clearly spelled out trading partnership, you are a lawsuit (and a losing law suit, at the) waiting to happen.
  8. A CTA is an individual or organization which, for compensation or profit, advises others as to the value of or the advisability of buying or selling futures contracts or options on futures.

    Providing advice includes exercising trading authority over a customer's account as well as giving advice based upon knowledge of or tailored to customer's particular commodity interest account, particular commodity interest trading activity, or other similar types of information.

    Registration is required unless:

    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 or ...

    Check with the nfa and cftc, you should be exempt with $50,000.

  9. jeffly


    Great reply thanks.
  10. the1


    You don't need the series 3. You can manage up to 400k per year for no more than 15 people without registering or getting a license.

    #10     Jul 22, 2009