Trading for other people?

Discussion in 'Trading' started by AsaFce, Oct 20, 2003.

  1. AsaFce


    What are the legal and tax implications if I trade someone else's money, even in someone else's account?

    Say I have a series of people, friends and aquaintances, that like the way I invest, and want me to apply those same principles to their money. Theoretically I could start a hedge fund and have them pay me the money, etc etc.
    But if they already have trading accounts and give me access to them to trade them and then I am paid some percentage of gains.

    Aside from any worries on their part of what I might do with their money, or the obvious risk of losses in the market - what legalities are there?

    Does it matter if I don't live in the US? But I am a US citizen?

    I am aware of an account type at IB that allows other people to add/withdraw money from your account, and you have access to it to trade - is that the route to go?

    I apologize if this has been covered before, but it seems like a hard thing search for.

  2. the ib fa account is a great way to go. you can set the account allocation up ahead of time and it automaticly takes care of the fees ect.
    legalities vary state to state.
  3. AsaFce


    Thank you for the prompt reply. I will try to talk these people into that account then. I will need to read more on it.

    I don't live in the States, so I would assume you mean the state in which the person putting in money lives..

    Is there a place that I can read about this - or any books/websites/magazines that would talk about it? I have tried to find information on trading type information on the IRS website before and it has always been notoriously hard to navigate.

    I will look at the IB info again now - in closer detail this time.
  4. if you dont live in the states i think you would fall under the laws of where ever you live.