You would still need an agreement so that he can disclaim any liability towards his mistakes and detailing his compensation.
Zastaber - that had been my plan, but the question is - what is "standard" and where can i find a "standard" contract between client and myself, having Trading Authority on account? cszulc - i agree and agreement is neccessary no matter what. my questions at this point are whether i can just find some kind of "standard" contract as i mention above or whether setting up an LLC / LP is neccessary. if you or anyone else have thoughts i am very interested! thanks - adam
Broker's statements would not be considered a legitimate track record against which investments can be solicited. While it may be enough for your friends and family, don't go advertising those results to the general public, as I believe there are regulations against doing so. An audit that conforms to Generally Accepted Accounting Principles (GAAT) must be performed. Further restrictions may apply as well, though I'm unsure.
The Attorney or lawyer gave you the best free advice and you are still going around in circles. You already have an LLC, add the name of your Investor to the LLC (through your State Agency) as a Non-Managing or Passive Member and write a simple agreement between both of you on how to share the expenses and profits or losses. You do not need a Lawyer for this. You will be trading through the LLC and hence, you can take her out of the LLC after you have finished trading with her. You can also bring in new Members to the LLC if you choose to, by informing your State Agency. You are actually better of with an LLC than an LP because you already have an LLC. I have been doing what you are attempting to do for quite sometime. Make sure, you have your funds in the LLC also and not her money alone. This is so because, if you lose big time and she decides to sue the LLC, she will be suing herself also. The best scenario is to make her a lot of money and you will all smile to the bank ..... no lawsuits, no lawyers, no judges, no frustration and no animosity.
hey i can appreciate how easy what you're suggesting sounds, but i can't have her be a member of my LLC. the main reason is that i don't want to share my intraday trading profits with her - i want to trade her account as a position trading account only. if you think about how day trading opportunities come up it will make sense - i see opportunities all day long for profit - if she was a member of my LLC, she would now be taking profit out of my wallet and putting into hers. that's why i want to keep her account totally separate. that's the reason i am talking about the 'hassle' of setting up a separate LLC / LP. it just seems like a bit of overkill for 1 contract with 1 person. however, you are correct in saying the only lawyer to post did make this suggestion. i guess i just don't know what is best which is why i'm here asking. anyway, thanks for your thoughts - Adam
I still do not understand what your problem is? You can do the following with your LLC: 1. Tell your Brokerage Firm to set up a major and minor Account within your LLC. Inform the Firm that one Account will be for swing or position trading and the other for day trading, and that you do not want to mix both. Thus, you have two Accounts within your LLC. One for your Investor and the other for you. I do not know what instruments you trade but in commodities or financial futures, this is allowed. I think the dual account is also allowed in stocks. You can then sign a simple Agreement with your Investor, spelling out the specific Account that belongs to her. As long as you make a good profit for her, you are all ok but if she loses while you make money, she could sue your LLC and even you. This is why you should make her a member of the LLC and spell out which Account in the LLC belongs to her and make sure only her funds are in that particular Account. And never use her funds to cover your own margin calls. 2. The second option is to open two different Brokerage Accounts with two different Firms for your LLC. One Brokerage Account is yours and the other hers. For your protection, you should still make her a member of the LLC and spell out which Account belongs to her in a simple agreement and ensure that as you make money, she also makes money. Finally, I do not know what instruments you trade but you are very wrong to state that daytrading is more profitable than swing or position trading. The richest Traders who make millions are Swing and Position Traders and not Daytraders.
i do appreciate your thoughts but i'm not comfortable (at this point) having anyone else be a member of my current LLC. i am going to talk to my accountant and possibly a lawyer about this to discuss. i think at this point i'm more confused than when i started! no offense ... i'm laughing about this now as far as your last comment goes i think you misinterpreted what i said. there are profits available to the daytrader who is able to capitalize on watching the markets all day, and then there are profits by being in longer term positions. for daytrading, profits can be limited to the stock(s) liquidity you are trading, as well as speed - as it can be difficult to get into a large position quick enough for it to be profitable quite often. for position trading, profits are less limited, as liquidity is much less of a factor as the time in the trade becomes longer. i see these as 2 distinct income streams. the first income stream (daytrading) is limited - which is why i dont want to share profits. the second income stream is less limited - which is why i want to trade this woman's account on a position trading basis
The problem is the OP is not ready. I would pay double and expect to get sued if you do this now. I've read some of your posts and this is my opinion. And, my remarks are given in good faith.
oh - i assume OP is me? listen i do appreciate you posting and i am certainly looking for advice here or i wouldn't have posted in the first place. as far as me paying double if i did this right now you are probably right. as far as me getting sued you are probably wrong - only because i'm a successful trader and at the end of the day all people care about is profits. the truth is i am not rushing into anything. if it takes me 6 months to get a contract / LLC / LP set straight then that's what it will take. i can't help it if i find all of the various advice i got is confusing. so many different opinions... i wish it was easier to get a consensus or expert opinion... hey - maybe i'll hire 10 lawyers & 10 accountants and put them in a room for an hour and lock the door behind them until they get me a consensus.