Trading other people's money

[grantx]

Markus,

If you know of any Swedish girls looking for a good time, pass them my details:

appearance - often compared to a younger Alain Delon
six-foot tall
athletic – mountaineering, marathons, rugby,
numerous degrees – Oxford, Cambridge, Sorbonne, Harvard
fluent in French, German, Italian, Russian, Latin, ancient Greek and Aramaic
head of discretionary trading for Goldman Sachs, Deutsche Bank and Paribas
short-service commission in a senior cavalry regiment/SAS (3 years and I was a brigadier)
properties in London, Monaco, Geneva (and Stockport)
born of one the oldest aristocratic families in England
good with animals and children
donates millions to charities
loves all races and religions
I seek nothing but peace and harmony for all mankind
I am also a chronic fantasist.

Grant.

 

[BSD]

LOL Grant !

We really need to party I think next time I''m in London !

 

[grantx]

Markus,

Sure. Bring some of your wife's sisters.

Grant.

 

[JP1966]

There is quite a lot of incorrect advice on this thread I am afraid.

If you are carrying out investment business then that is a regulated activity and if you are not regulated then if it all goes wrong then you are liable personally liable for all the losses. However it is not as clear cut as all that.

Consider the example of most prop shops. Most of these are not regulated and yet they are allowed to employ people to trade on their behalf, who also are not regulated. This is perfectly legal.

Although it is a grey area if you are only managing a few peoples money, (it comes under the broad umbrella of friends and family) and it isnt some old granny whose life savings you are about to spunk up a wall, then there is no need to be regulated.

I would also say this isnt just my opinion, I have spent a fair few pennies getting legal advice on this very matter in the past.

Incidentally if you are a full time trader then don't waste money by paying a wider spread on spread bets. You should pay tax on the profits anyway as you are not exempt - just like someone who trades equities frequently is not entitled to his CGT allowance.

Hope this helps.

 

[jkplay]

There is quite a lot of incorrect advice on this thread I am afraid.

1.If you are carrying out investment business then that is a regulated activity and if you are not regulated then if it all goes wrong then you are liable personally liable for all the losses. However it is not as clear cut as all that.

Consider the example of most prop shops. Most of these are not regulated and yet they are allowed to employ people to trade on their behalf, who also are not regulated. This is perfectly legal.

2.Although it is a grey area if you are only managing a few peoples money, (it comes under the broad umbrella of friends and family) and it isnt some old granny whose life savings you are about to spunk up a wall, then there is no need to be regulated.

I would also say this isnt just my opinion, I have spent a fair few pennies getting legal advice on this very matter in the past.

Incidentally if you are a full time trader then don't waste money by paying a wider spread on spread bets. You should pay tax on the profits anyway as you are not exempt - just like someone who trades equities frequently is not entitled to his CGT allowance.

Hope this helps.

Good morning JP1966

Well if the solution I outlined in post 51 is incorrect then im off to my tree house in Switzerland with nothing but a crate of Johnnie Walker and the excitement of being chased by the tax man to keep me company.:cheesy:

You are touching on separate issues. If he is a full time trader looking to manage significant amounts of money then Spread Betting isn't the right way - spreads, execution (although alot of firms have special services of high volume) and.. yeah spreads. So doing anything other than SB is a bit of a minefield - which you would need to consult a tax advisor about - not post on a trading website.

Putting that to one side and assuming Scotch isn't managing more than say £25,000 (he is probably managing more around the £1500 mark) I think sb is fine. Can I ask if the lawyer you consulted was familiar with spreadbetting as an alternative? You mention you should pay tax on your profits, correct me if im wrong but spreadbetting is Tax free?

He is not carrying out investment business and it isn't a controlled function - fact. As I have said probably 5 times on this thread, if spreadbetting, he is a gambler.

Have you got any solutions JP1966? What did you and your lawyers decide to do in the end?

JK

 

[grantx]

JP,

Legal advice cost me £4000 around 6 years ago. What did they charge you?

Grant.

 

[jkplay]

Legal advice cost me £4000 around 6 years ago

Grant.

Hi Grant,

What did the lawyers conclude after you gave them the 4 grand? Did you talk about spreadbetting or just general discretionary account management.

JK

 

[grantx]

JK,

I don’t think Spread betting (in its current form of easy access) was around then. The advice I received can be reduced to what I couldn’t do, and what I could do, ie necessary conditions/requirements regarding off-shore discretionary trading but operating from the UK .

This was in the context of a Sole Trader, and limitations would mainly relate to this as an FSA entity. For example, if there was more than one trader/adviser (obviously not a Sole Trader) then, inter alia, a separate Compliance Officer would need to be employed. Also, the minimum Capital Requirement would go from Euro 50,000 (Sole Trader) to Euro 250,000 (these figures may need to be revised).

As well as the £4000 for the UK advice, a similar amount was paid to an Isle of Man legal adviser for the off-shore aspect.

Grant.

 

[jkplay]

JK,

I don’t think Spread betting (in its current form of easy access) was around then. The advice I received can be reduced to what I couldn’t do, and what I could do, ie necessary conditions/requirements regarding off-shore discretionary trading but operating from the UK .

This was in the context of a Sole Trader, and limitations would mainly relate to this as an FSA entity. For example, if there was more than one trader/adviser (obviously not a Sole Trader) then, inter alia, a separate Compliance Officer would need to be employed. Also, the minimum Capital Requirement would go from Euro 50,000 (Sole Trader) to Euro 250,000 (these figures may need to be revised).

As well as the £4000 for the UK advice, a similar amount was paid to an Isle of Man legal adviser for the off-shore aspect.

Grant.

Hey Grant,

That sounds like sound advise if you where looking to set up your own firm. Of course I don't know your previous circumstances but if you when through all that to trade off your friends account I feel your pain.

I think alot has changed in the last 6 years, particularly in the development and attractiveness of spread betting and all my comments boil down to Scotch placing trades for his friend - which can now be surprisingly simple.

JK

 

[grantx]

JK,

This was way beyond simply friends; it was bona fide trading operation for non-private clients, etc.

A lot has changed in the last six years but this doesn’t translate to a relaxation of the basic function of the FSA – protection of customers. Indeed, it has tightened (and all the better for it), but there are still areas being exploited by the unscrupulous, eg authorised boiler rooms pushing/ramping pre-IPO’s (a natural development of the non-regulated retail OTC operations of the late 80’s).

My knowledge of spread betting is less than yours, and your ideas may be perfectly valid. However, I believe it’s only a matter of time before the treasury and regulatory authorities close in.

In an SB context, as you say Scotch may be OK. But if one can legitimately trade for another, then why not half a dozen, 25 or 50? Think of the money saved on, eg IT systems, regulatory costs, capital requirements, personnel. Therefore, the question shouldn’t be “Can this be done?” but “Why hasn’t this been done?”.

Grant.