Looking for some general advice here guys!

Hi people,

Im looking for som advice here before I go and get some solid legal advice!

Im no trader as such in the traditional financial markets, however, whether you care to believe or not I actually make money from "gambling" I prefer to call it investing as I have been doin this for 6 months and not lost anything yet.

The problem is that while the method is really good I lost a lot of money to begin with and I dont believe its the holy grail it is made out to be! Certainly when all the pitfalls are cleared its as good as gets. The returns are claimed to be up to 10% per day, however, I have rarely experienced a return about 7 percent in a week, which I would say is an amazing week!

My Problem

I was wanting to start some kind of membership site were I would fully disclose what I was doing and offer other members to join in. The amount people could invest and the amount they could invest would have to be limited as bookmakers keep a close eye on bets and if they usually see this kind of activity then your accounts are limited!

I would, of course, be taking a small percentage of the groups profits for managing the investments!

Does anyone know of any legal implications in setting up something like this. I am based in the UK and know that setting up an investment club is only legal for an unqualified financial expert if there is no consideration paid for the service. However, I will be taking a small cut of profits. Would this still constitute an investment in the eyes of the FSA or any other body for that matter?

What if through some misfortunate act I lost the god dam cash!

This is something I feel I could run successfully, however, I want to act within the law!

Could anyone provide any advice on the matter, not even on law on anything!

Cheers guys, Much appreciated!!!

What about a share club? Contact Proshare.

tomorton said:

What about a share club? Contact Proshare.

Click to expand...

contacted proshare and paid for their investment manual, quite cool stuff on running a club, but you cant take a cut of any profits or anything, no one can be reimbursed for anything!

Incase I didnt mention, the system is using betfair and bookmakers, I know it sounds far fetched and I thought so too! Just incase you thought I was talking about gambling on the markets. This is pure sports markets!

pearo86 said:

contacted proshare and paid for their investment manual, quite cool stuff on running a club, but you cant take a cut of any profits or anything, no one can be reimbursed for anything!

Incase I didnt mention, the system is using betfair and bookmakers, I know it sounds far fetched and I thought so too! Just incase you thought I was talking about gambling on the markets. This is pure sports markets!

Click to expand...

==================================================================

while i dont consider it a good idea and even less of a good idea for someone with your lack of experience, there are ALWAYS ways to circumvent some of the laws of the land. Understand, if people do indeed subscribe, you will be working with a much larger stake than most usally begin with, which would mean YOUR OWN INVESTMENTS would increase at a much faster rate than normally possible.

here in the USA, we simply open a "financial holding company" which is usually a corporation which is a legal business entity and not a "human" entity, such as yourself -- the corporation then "manages" the money, and receives a commission for that service. Being an "officer" in the corporation means, although you may only be paid $1.00 a year, you are entitled to the "perks" of the office !

another way, which you would have to figure based on your laws, is to take a small portion of the money from your investors and use that as a contribution to your own portion of the fund --- taking profit from those investments as mentioned above.

essentially, theres ALWAYS a way and most decent tax lawyers and accountants already know them !

losing the money means you lost the money --- if you acted in a normal feduciary manner, exposed the fund to no untoward risks and behaved in a "normal" trading manner, you would be legally blameless for what happened, but since it CAN happen with a lack of experience and dependence on as yet an unproven "system", you "could" find yourself facing some liability -- the more of a track record and experience you have, the less culpable you become !

mp

from a personal experience point of view, money can sour relationships pretty quickly, so I would not be surprised if some of your family/friends don't ever want to talk to you again if things go belly up.

It's all about expectations I suppose and since you say you are inexperienced my advice is to stay on your own for some time until you get better at the game and know it inside out (or as much as possible). There are loads of naive people who somehow "become" profitable and have ideas about "starting a hedge fund" or investment "club", and they nearly always gets burnt when things go bad.

There are people who are making serious money out of betfair, but they are not going to give out their methods or share information on the grounds that it's too valuable and that they've suffered a long period of learning to get to where they are. They also do not want to go into partnerships with other people's money to leverage since it obligates them and can affect their performance.

pearo86 said:

Hi people,

Im looking for som advice here before I go and get some solid legal advice!

Im no trader as such in the traditional financial markets, however, whether you care to believe or not I actually make money from "gambling" I prefer to call it investing as I have been doin this for 6 months and not lost anything yet.

The problem is that while the method is really good I lost a lot of money to begin with and I dont believe its the holy grail it is made out to be! Certainly when all the pitfalls are cleared its as good as gets. The returns are claimed to be up to 10% per day, however, I have rarely experienced a return about 7 percent in a week, which I would say is an amazing week!

My Problem

I was wanting to start some kind of membership site were I would fully disclose what I was doing and offer other members to join in. The amount people could invest and the amount they could invest would have to be limited as bookmakers keep a close eye on bets and if they usually see this kind of activity then your accounts are limited!

I would, of course, be taking a small percentage of the groups profits for managing the investments!

Does anyone know of any legal implications in setting up something like this. I am based in the UK and know that setting up an investment club is only legal for an unqualified financial expert if there is no consideration paid for the service. However, I will be taking a small cut of profits. Would this still constitute an investment in the eyes of the FSA or any other body for that matter?

What if through some misfortunate act I lost the god dam cash!

This is something I feel I could run successfully, however, I want to act within the law!

Could anyone provide any advice on the matter, not even on law on anything!

Cheers guys, Much appreciated!!!

Click to expand...

Strikes me that there is a lot you should think through before you even begin to contemplate something of this scale.

1. Since you're talking about Betfair and bookies, I guess you are involved primarily in sport arbitrage.

2. The fact that you say that the returns are claimed to be upto 10% per day but that you have rarely exceed 7% per week suggests that you have acquired or are using another sports arbitrageur's method. Sports arbitrage is fiercely competitive and if someone publishes or even hints at their method publicly than it usually means that they know that either their chosen markets are reaching saturation point or that their edge is subject to erosion for other reasons. Your 7% figure kind of substantiates that. Still, make hay while the sun shines I suppose, but I wouldn't have thought that with that kind of erosion over 6 months you could plan any kind of expansion unless you are capable of developing smarter/more creative pricing models yourself or the number of new markets grows in line with continued erosion, i.e. less return over more markets. My own suspicion is that binaries will take over from fixed-odds (even in sports) sooner rather than later and all but the smartest of arbitrageurs will be squeezed out because of it. That's why there are so many complaints regarding the transition of certain markets from betfair to tradefair.

3. You suggest that investment would have to be limited as bookmakers keep an eye on bets. That is part and parcel of sports arbitrage, i.e. you will have to get used to opening new accounts (you should in fact probably have half a dozen open already if you are doing what I think you are). The sports arbitrageurs I've known go through dozens of accounts and have to find ever more creative ways of "managing" the account opening process. This isn't quite such an issue when you are arbitraging between BF and bookies since you can clearly take losses occasionally in the bookies account whilst taking profits in the BF account. It does eventually still become a problem though. Again, the "odds" are stacked against you as far as long term planning.

To be honest, I'd run with it as is for another six months and see how you get on. You will get a much better idea of whether any kind of expansion is viable.