Hello, Just wondering if anyone is aware of the specific licensing requirements for starting a website that generates income through subscriptions for stock/trade recommendations? I've reviewed the SEC and FINRA websites and all the information seems to target the financial advisory types with a store front office or a firm with assets under management. Nothing specific to address a stock trading website/blog where there wouldn't be any assets under management. Interested to here if anyone has looked into this at all? Thanks A
There are not any that I'm aware of. But there are standard disclaimers that pretty much everybody in that space uses. Go to any site that makes trade recommendations or provides trading education and you'll see the disclaimers, or a link to them, at the bottom in the footer. In a nutshell, they basically say all the info they provide is for educational purposes only and that you should consult a licensed financial professional before making any investment.
Yes, they're protected by a "newsletter exclusion" that goes way back to a Supreme Court case many decades ago. Just use the disclaimers and don't give specific, personal advice. For example, you can say "these stocks are on my buy list" but don't tell someone exactly how to invest $100,000 they just inherited.
Look at the AGs. They have the power to regulate pretty much all commerce. Then look at the issues that the FTC regulates across state lines. SEC and Finra "pretty much" only look at registered people and entities. Look at the history of Wade Cook - his demise came at the hands of the Ags - had two NY times bestsellers out when he met his end. Much of the grandfathering in and letter exemptions predate the internet and while you're running a blog avoid trading and be especially cautious of futures on options. The States will pay special attention. https://www.sec.gov/oiea/investor-alerts-bulletins/ia_newsletters.html The big question you want to ask yourself is why do it? Unless I can profit in some way - and that's the rub and the concern I'll involve a regulator of some kind. If you know anyone that has a series 24 chat with them.
Some great information there, thanks for all your replies. I certainly wouldn't be doing anything Wade Cook like. My thinking was to write with Seeking Alpha to build a following and link to my own website for people to follow my trades, as a newsletter subscription. I'd only trade in large cap stocks, indices and futures so pump and dump was not a factor in my trades. Would also be happy to have the portfolio independently audited so there was full-disclosure on the performance. Again, your right, is it worth all the hassle to potentially be involving a regulator and possible fines at some stage for whatever reason? This is a major deterrent for me.
One of the exclusion from Section 202(a)(11)(A)-(E) of the Advisers Act (Registered Investment Advisor): Publishers of bona fide newspapers, news magazines, and business or financial publications of general and regular circulation. Under a decision of the United States Supreme Court, to enable a publisher to qualify for this exclusion, a publication must satisfy three elements: (1) the publication must offer only impersonal advice, i.e., advice not tailored to the individual needs of a specific client, group of clients, or portfolio; (2) the publication must be "bona fide," containing disinterested commentary and analysis rather than promotional material disseminated by someone touting particular securities, advertised lists of stocks "sure to go up," or information distributed as an incident to personalized investment services; and (3) the publication must be of general and regular circulation rather than issued from time to time in response to episodic market activity or events affecting the securities industry. See Lowe v. Securities and Exchange Commission, 472 U.S. 181 (1985). So basically, "starting a website that generates income through subscriptions for stock/trade recommendations" in my opinion, is not part of this exclusion. Being very careful regarding choices of words, is the key: "Recommendations" could be "Suggestions" or "..what I would do". Again, just my opinion Best!