"Personal guarantee" required when trading under a company ?

Discussion in 'Retail Brokers' started by puretruth, Oct 6, 2009.

  1. OEC told me that if I want to trade under a company , I need to submit a personal guarantee letter and provide a personal financial statement.

    I was told that it depends from the financials of the company wether you have to provide such

    Is this common practice ?
  2. Yes.... whatever the broker wants to allow you to trade through them.
  3. Bob111


    no such thing in IB corp account.
    but you still have to provide all personal info.SS,income etc
  4. cstfx


    Yes, many firms require this since you could blow up the account and leave the broker hanging for any excess losses. Advantage required this too when I opened an acount there, but like Bob said, IB did not. This could have had more to do with the fact that I also had a personal account with IB so they were able to reference that to determine my qualifications.

    There are also many brokers who will now do a soft pull credit check before they allow you to trade on margin. There was a thread here about 2 yrs ago that some brokers were doing this since they are opening a margin account with them.
  5. TransAct doesn't, but Velocity did. It all comes down in the end to how good their risk management software is.

  6. What is a "soft pull credit check" ?

    What if you are a foreigner ?

    Do you have to supply them typical with a bank statement ?
  7. WinSum


    Bad news is that Personal Guarantee negates limited liabilities of incorporating.

    Good news is if this become standard for Hedge Funds, then Hedge Fund managers will be incentivize to have good risk managers in place.

  8. You are talking about Advantage Futures ?

    Did you had to submit a personal financial statement of your bank ?

    I have no problems with signing a personal guarantee but submitting financial statements goes 1 step too far
  9. As bob said, IB does not require this "personal guarantee". And I have no other account in IB except my partnership account (Illinois LP). However, if I do blow up, I fully expect IB to come after the General Partner (which is a Illinois Corp, with me as 100% owner), and me, for the balance. Not sure about the legality of such, but best is to NOT blow up :D

    Soft Pull, Hard Pull
  10. I almost find it hard to believe that brokers would not require both a personal guarantee and possibly, financial statements. Trading is risky, for you and the broker. For example, most serious vendors/suppliers would require a personal guarantee if you had a somewhat large credit line with them for other kinds of business.
    #10     Feb 15, 2010