Trading friends accounts

Discussion in 'Trading' started by vincentvega, Jun 15, 2012.

  1. I was wondering if there were any bad legal problems with trading your friends accounts as a retail trader. I'm just another retail trader with a retail account.

    I would like to start an LLC someday that won't earn much from active trading. I will own most of the LLC. Would it still be bad at that point?
  2. Bump
  3. Generally the issues start arising if you're getting compensated for trading other accounts and are doing it as a business.
  4. lindq


    Yes, there are potentially big problems legally. SEC registration may be required as an RIA depending on how many people are involved. And even if registration is not required in your case, you can still be held liable for holding yourself out as an expert in trading if you lose money in those accounts.

    Bottom line: Before doing anything, consult with an attorney with expertise in securities law.
  5. emg


    Trading "FRIENDS" accounts without proper legal documents and series 7 license (series 3 only if managing 16 greater accounts)can turn into a nightmare. Gov (if trading stocks) will bankrupt u with their hefty fined. Friends can turn into your very worst enemies and why, because friends know u too well and know what u have. they will take everything u owned.

    More than 90% of small traders lose! They just lose!
  6. emg


    Also, setting up a LLC meaning that u are a SUCCESSFUL license broker for the past 10 years. There is no such thing as a retail trader who have never worked in a brokerage or never been a license broker wants to open an llc. That is short cut.

  7. just21


    Use Ib friends and family account to avoid legal problems. You can trade upto 15 accounts without accepting any money and therefore regulatory problems.
  8. After you lose all of your friend's and family's money......well, you will then have NO friends and family.

    IF, and this is an impossible IF, you make 5% and the market is up over 5%, they will wonder why you can't even beat the market.


    tell them upfront it is extremely risky and there is a 95% chance you will lose it all. make them sign the disclaimer.

    if not, they will sue you and you will be broke and still with no friends or family.

    it is worth it, so go for it!!!
  9. Bison42


    The biggest problem you have is that you have stupid friends. If you have no idea what you are doing, your friends have even less of an idea.
    Pick your poison. Keep your friends or lose all their money,
  10. nkhoi

    nkhoi Moderator

    step 1 of ' How to Lose Friends and Alienate People '
    #10     Jun 18, 2012