Australian (ASX) Stock Market Forum

On the verge of opening an underground fund

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Every which way you look the risks exceed the rewards, basically. Welcome to Australia :p
 
Ill bite. Take me on as your first client, Ill give you $100k that I want you to make 20% return on in 12mths.*

*Keeping in mind if you dont return the desired 20%, I can get you whacked for $5k


pinkboy
 
darkhorse70 said:
Oh ok thanks cynical. 20 people is more than id expect to contribute. Maybe 5 for now. Hopefully that option is still available. Ill also juggle around clients, set rules for lock in periods etc just to prevent destabalisation etc. Thanks for the reply
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The destabilisation issue may be bigger than you realise. I'm no expert in law, but from what I've observed in Australia, circumstances of hardship, or perhaps even failed domestic relationships, can result in claims that supercede many of the contractual clauses that one might have in place.

However, given your enthusiasm for this endeavour, I believe this will prove a valuable and educational experience for yourself and your friends.

Edit:My last comment was intended to extol the benefits of education in the "University of Life" a.k.a "School of Hard Knocks" and was not intended as an appraisal of the financial prospects of the venture.
 
McLovin said:
People get funny when it comes to money. I reckon if you're going to manage your friends' money then you need to be prepared to not just lose their money but their friendship.:2twocents
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Even went it's all down in black and white! It's all bed and roses until someone loses (or feel they've lost out) then the true colours come out.

So sad but oh so true and for the tiniest amounts too. Spoken from experience.
 
DeepState said:
That's actually my understanding too, but I was scared off by Ves' incarceration scenarios! Easier to run off to Cayman. I understand that <20 is viable under private placement memorandum without the preparation of disclosure document. There is a limit on the number of people you can solicit from as well. All the PPMs I've seen were numbered and our names recorded as recipients. Here's the link explaining it.

http://www.asic.gov.au/asic/asic.nsf/byheadline/Raising+funds+in+Australia?openDocument

As to avoiding an AFSL, DH70 can achieve this by becoming an Authorised Representative of some organization that has this sorted. Getting an AFSL as a fund manager is upwards of $60k. As a result, fledgling fund managers often piggy back off those who have already gone through it. Gaining an Authorised Representative status requires the AFSL holder to ensure that their representatives are suitable and competent. That could be a show stopper on this occasion.

Here is the relevant clause:

View attachment 58792

So, the local way of achieving the 'desired' outcome is to get some sucker/scammer with an AFSL already in place to whack you on the register as his Authorised Representative, prepare some cut down doco and market it to only 20 people and raise less than $2m. I do not know if this requires a registered trust to house the investments. I think you can get around it by being an 'adviser' or something like that as opposed to the RE and Manager of a registered unit trust. Dunno, but this is achievable in one way or another.


All that failing, here is the exemption from Australian law, in terms of requiring an AFSL, if you were to set up shop in Cayman and investors miraculously turn up to ask you to manage their money as per prior post:

View attachment 58791


Any way I look at this gambit, as the barest minimum, the scale required is an order of magnitude (maybe three) higher than what DH is considering.


Perhaps DH should consider another line of work. This guy invested $20 and grossed over $8k in one night, having the time of his life whilst at it. Further, he got a place in Princeton University:

http://www.metacafe.com/watch/an-NTjcutYbYhtJ2/risky_business_1983_ending/
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Cheers, RY.

The grey area for me seems to be that while this is a MIS, it is not required to register because of the limited size. A requirement of registration is holding an AFSL, but I can't find anything that says not being a registered MIS removes the requirement to hold an AFSL. So it's really just an assumption on my part. And when you assume you make an ass of u and me.:D
 
Craton said:
Even went it's all down in black and white! It's all bed and roses until someone loses (or feel they've lost out) then the true colours come out.

So sad but oh so true and for the tiniest amounts too. Spoken from experience.
Click to expand...

Also agree, spoken from experience on both sides of the equation.

Life's too short to be taking big risks with your mates' money. Especially if you only have 2-4 real friends. You should try and keep those ones.
 
McLovin said:
Cheers, RY.

The grey area for me seems to be that while this is a MIS, it is not required to register because of the limited size. A requirement of registration is holding an AFSL, but I can't find anything that says not being a registered MIS removes the requirement to hold an AFSL. So it's really just an assumption on my part. And when you assume you make an ass of u and me.:D
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Geez this is hilarious. But I'm l(Mc)Lovin this because this was kind of what it was like when we got off the ground. All angles were examined etc. Except we had a little bit of expertise. Anyway, DH70 has no cash to establish an MIS. You also need to get an RE, sort out custody and get a unit pricing registry etc. If before was a challenge, this will blow it further into the ground/stratosphere.

Please see the attached http://www.asic.gov.au/asic/asic.nsf/byheadline/Managed+investment+schemes?openDocument
. It highlights that he can buy/sell shares directly for his clients as previously mentioned. This obviates the need for an MIS in any form. These are termed 'segregated accounts' and all that is required is an Investment Management Agreement and they are off to the races, ponies whatever the f... He's up and running. He can source pro-forma IMAs from IFSA just like an insto (http://www.fsc.org.au/standards-guidance/standard-investment-management-agreements.aspx).


So, to get up and running DH70 or one of his shady mates needs to:

1. Become an authorised rep of some shadier organisation who has an AFSL.
2. Prepare a PPM. That might be as long as a 10 word sentence. "I am good. Give me money. Good luck with that." A short form PPM might be "Gimme money"
3. Market to less than 20 friends in a 12 month period
4. Turn down any accounts or otherwise scale back existing accounts that may bring Quantum Emergence I over the $2m mark, at least for twelve months.
5. Have each of his stupid, shady mates establish an IB or Comsec account. Sign an IMA with names filled in from the IFSA pro-forma, ensure he has access to their accounts.
6. They deposit their commitments.
7. He proceeds to lose their money.

This is real. It can be achieved with very little money if the AFSL license holder is not extortionate. This can be done. In fact, this is how to do it. DH70 was not completely nuts to dream big. He can actually become a hedge fund manager with $1000 and be within the law.
 
DeepState said:
Geez this is hilarious. But I'm l(Mc)Lovin this because this was kind of what it was like when we got off the ground. All angles were examined etc. Except we had a little bit of expertise. Anyway, DH70 has no cash to establish an MIS. You also need to get an RE, sort out custody and get a unit pricing registry etc. If before was a challenge, this will blow it further into the ground/stratosphere.

Please see the attached http://www.asic.gov.au/asic/asic.nsf/byheadline/Managed+investment+schemes?openDocument
. It highlights that he can buy/sell shares directly for his clients as previously mentioned. This obviates the need for an MIS in any form. These are termed 'segregated accounts' and all that is required is an Investment Management Agreement and they are off to the races, ponies whatever the f... He's up and running. He can source pro-forma IMAs from IFSA just like an insto (http://www.fsc.org.au/standards-guidance/standard-investment-management-agreements.aspx).


So, to get up and running DH70 or one of his shady mates needs to:

1. Become an authorised rep of some shadier organisation who has an AFSL.
2. Prepare a PPM. That might be as long as a 10 word sentence. "I am good. Give me money. Good luck with that." A short form PPM might be "Gimme money"
3. Market to less than 20 friends in a 12 month period
4. Turn down any accounts or otherwise scale back existing accounts that may bring Quantum Emergence I over the $2m mark, at least for twelve months.
5. Have each of his stupid, shady mates establish an IB or Comsec account. Sign an IMA with names filled in from the IFSA pro-forma, ensure he has access to their accounts.
6. They deposit their commitments.
7. He proceeds to lose their money.

This is real. It can be achieved with very little money if the AFSL license holder is not extortionate. This can be done. In fact, this is how to do it. DH70 was not completely nuts to dream big. He can actually become a hedge fund manager with $1000 and be within the law.
Click to expand...

With PI premiums and the political and regulatory environment as they are you'd have to be a special kind of insane to be giving auth rep status to stuff like this at this stage :eek:
 
Vixs said:
With PI premiums and the political and regulatory environment as they are you'd have to be a special kind of insane to be giving auth rep status to stuff like this at this stage :eek:
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Vixs, You are thinking like a reasonable, informed, experienced and rational person. In the extremes of physics and finance, those laws don't apply. It's a hit rate thing..fire enough bullets and you'll eventually find that numbnuts. It only takes 1:badass:

....and that 1 almost certainly exists.

:1zhelp:
 
Ah OP, I take you were joking about tapping into the Asian college friends' network & get some investment funds? :D
The reason of Asians mainly Chinese pouring into Australian market is the property purchase restriction that had been going on for some time & the current trend of house pricing going down. When the riches are restricted from owning 3rd & 4th & 5th property, and also they don't see any potential near term value increase, they've shifted the focus to overseas. But weather they'll hand you the money, that's another story. From personal experience, there's a lot of underground private money lending going on in more developed cities in China, with some interest rate @ around 10%. What makes you think the Asian riches would authorize you to invest their money at potential 10 - 20% return, when they can make a solid 10% interest income every year from well known network. Sorry if it sounds a bit cruel. All the best with your business idea though.
 
DeepState said:
Term Sheet

Manager: DarkHorse Asset Management Netherlands (hereafter "DAMNED")

Fund: DarkHorse Quantum Emergence I
"Physics states that particles appear within a total vacuum. Why not money?"

Investment Approach: TBA

Objective: High return, Low risk

First Close: TBA

Historical Audited Performance Composite: Confidential

Principals (Years with firm/Total Industry Experience):
DarkHorse70, Founding Partner. Zero Real Life Investment Experience
Unnamed Partner, Founding Partner, Final Year University Student - Law.
Combined investment experience (yrs): Zero

AFSL: Not available - Underground fund.

Minimum Investment: Negotiable

Target Funds: $1bn, with potential for a subsequent $1bn at manager's discretion

Lock-up: At manager's discretion.

Legal Jurisdiction: Not Relevant - Underground Fund.

------

The above is actually what your business looks like right now. Just saying...
Click to expand...


This is brilliant, RY!
 
Cynic, thata good to know about the destabilisation thing. I just dot down ideas in my journal and will look into all of it one at a time. Haha cynic it will be a life lesson. Thats for sure haha. Haha craton. Junior I said I have 2-4 gd friends. Only one will be on board and he is the other. My potential clients are my big hand full of 1st cousins of whom two are semi interested. The others are just friends you say hi n bye and have a laugh atm. This is not going to be a friendship thing, purely business and ill make that clear to them. No hard feelings.l but yes I know it could back fire big time in friendship status. Ive come to the conclusion that friends change all the time and they are hardly ever a constant thing. Now family is the greatest connection to me anyway. Haha cynical call it what you want haha im creating wealth or transferring it into their account I hope haha.retired young thats good to know apart from getting a afsl I think its doable. Illl have to dig deep into my connection of shady mates to pull one out of the hat for this. What shady mates haha? Most of my friends contribute to the growth of this society. I have two groups of friends. The ones who value education and the ones who dont. But they both have there benifits haha. Hopefully ive learnt alot from my paper trading, my numerous pages of entry logs, many hours of going through the same and dofferent charts and trying to visualise the different svenarios the stock might take and having some sort of idea about the bigger picture of the market / potential distribution phase which I believe is going to happen to direct me in sme sort of correct-ish path. We all start from the bottom julia. In your theory then why start at all. Yes I might lose the money of others, but thats the risk they took. In the end they get what they paid for. A cheap thrill and maybe a meal ticket. One things for sure they got a hella lot more chance of success with me then on their own with no idea about the markets. My cousin told me what should I invest my momey in. I told him I can advise you etc but then im practically managing it for him so it should be under my control to cut the risk etc asap instead of it dropping 20% then he calls me telling me what should I do. That way I can profit to if I give good advise. Just like one of the big time traders who was given $50000 by a commodities trader when he was only in his 20's with no experience. He took it, lost 80% but rebounded and his career took off. In your theory he should of walked away. He took some ones money and his career was born. PFW im serious about the asian connections. For example my friends korean friend was born here. His dad works in korea with some top government job. Anyway his dad and mum ve there but hes raised here. His dad sent him a million bucks to buy himself a house. His roomate also has 345k in his bank acc and his only 21. My point is these asians are loaded and the asians I know have a gambling tendency. I have asian friends who dump 10k down the pokies. With abit of persuasion and imagination I can easily paint them a nice picture. Im not saying con them. I wouldnt dare pitch it to them till I was getting constant results. Im just saying there is potential for possible capital resources IMO a and its better than them dumping it down the casino. It was just a possible avenue of the time came where I knew what I was doing to a high degree.
 
Oh and by the way I just love arguing. Not in that sense but I always challenge ideas, comments and I view it as a good thing. I figjt my points, if im wrong I learn some thing new. But yes I can be stubborn or bias which is never good. I dont want to be blinded by emotion but rather be rational
 
Hi Darkhorse70

Everyone who has commented are people I respect and admire their contributions. They are right when they raised the issues of you falling out with your friends. I believe that they are right with the many issues they have raised.
Anyway, why am I commenting? It is not likely you would take any notice from a beginner.

Good luck. I hope you will report in three, six or twelve months time and tell us your progress.

PS: I like motorbikes as well.
 
Faramir im not arguing their points. The question was never about my trading skills, how it could effect relationships etc, it was purely about a structure of a possible business. They are two completely different barriers. If I offered any one on this forum $10million to trade my account and they could charge a fee on profits im certain every one would take up the offer even if they werent confident in their rltrading skills. To them 10k is nuthing but to me its a big figure and a way to jump start a possible career oppurtunity. When uou look at in terms of risk and possible jail/fines you qs the oppurtunity hence why I created the thread for advice haha. Thanks. In all honesty the people who say will give some capital are probably going to back out. Talks cheap but atleast ill create a business plan and some type of goal while I save up to start trading which will be in the nxt few months hopwfully.
 
Hahahaha pinkboy, theres always a way roybd the system if u dig deep enough. If goldman sachs can bet against its own clients and get away in some fashion the we all can haha.
 

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