"Personal guarantee" required when trading under a company ?

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

  1. I never heard of or had to supply a financial statement when opening a personal account, why would you need to do that when opening a corporate account ?!
     
    #11     Feb 15, 2010
  2. cstfx

    cstfx

    Corporate accounts are used to insulate the owners from operational losses (trading, bakery, bars...doesn't make a difference) and a corporate account without much, if any, track record will be asked for this guarantee, not just for trading, but for stuff like rents, credit lines, equipment purchases, etc. Unless you have significant credit history for your entity, a personal guarantee will be required for anything that relies on that credit history. (Yes, businesses have credit histories too. Instead of the big three reporting agencies, corporations/businesses have their own credit databases, such as DnB).

    Since the potential for significant losses exist in a trading account, you can bet your ass they broker wants to make sure you are good for any losses incurred in your account.
     
    #12     Feb 15, 2010
  3. Somebody has to stand for a debit, should there be one. No "walk aways" like on some mortgages.

    If the corporation is a shell or has no assets, then somebody else down the the line must make any losses good.
     
    #13     Feb 15, 2010
  4. you ask this because you do not understand what is involved. Getting a little miffed when companies do reasonable things only indicates that you need to educate yourself on business reality.

    It is no more unreasonable than a storeowner asking you to pay for a new living room set on the way out, rather than trusting you to come back 2 months later, with the money.
     
    #14     Feb 15, 2010
  5. Most often, from what I have heard and been told, brokers run a credit check without explicitly telling you so, its in the fine print you sign off on. So require a PG some don't. I have experienced both.
     
    #15     Feb 15, 2010
  6. cstfx

    cstfx

    That's the "soft pull" I was referencing earlier. It doesn't show up as a hard pull (the kind that dings your credit), more like just sniffing around.
     
    #16     Feb 15, 2010
  7. lakai

    lakai

    have your banker guarentee it.
     
    #17     Feb 19, 2010