Trading friends and family funds

Market Sniper · 2 December 2010

Hi All

Just wanted to see if I could get some advice/feedback as to what is or is not legally required if I had say 10 or so friends and family who were willing to invest x amount into a trading system that i had? What is required on my part to make it all above board and compliant?

Thanks

prawn_86 · 2 December 2010

As far as i know you would need to have an AFSL, be registered company with ASIC, have responsible entities etc

There was a story in the news a few months back about someone who traded (and lost) with family and friends funds and is now facing court action by ASIC as he was unlicenced

$20shoes · 2 December 2010

Investment Club would do the trick?

http://www.asx.com.au/resources/education/investment_clubs/index.htm

From ASX:
An additional consideration is that if a club has more than 20 members, it becomes a Managed Investment Scheme which must be registered with the Australian Securities and Investments Commission (ASIC).

Naked shorts · 2 December 2010

loan it from them. write up a contract

Market Sniper · 6 December 2010

$20shoes said:
Investment Club would do the trick?

http://www.asx.com.au/resources/education/investment_clubs/index.htm

From ASX:
An additional consideration is that if a club has more than 20 members, it becomes a Managed Investment Scheme which must be registered with the Australian Securities and Investments Commission (ASIC).

Seems like an interesting possibility although I'm not really trying to set it up so we can all meet up and discuss the strategy and how it could be improved upon.

All I want to do is present a traded system that I have used and traded with x% return pa and if they are interested they can invest $x, and on the basis that it is profitable I receive x% and they receive x%. Not sure about the management fee part of it yet as to whether it is needed as well as the % split between myself and the friend/family.

ParleVouFrancois · 6 December 2010

As naked shorts said, just loan it from them via a contract. I'm pretty sure you can write into it the repayment scheme you desire (e.g. I'll pay off how much I earn %wise minus 2% per annum or something) It'd be the exact same result.

awg · 6 December 2010

Market Sniper said:
Seems like an interesting possibility although I'm not really trying to set it up so we can all meet up and discuss the strategy and how it could be improved upon.

All I want to do is present a traded system that I have used and traded with x% return pa and if they are interested they can invest $x, and on the basis that it is profitable I receive x% and they receive x%. Not sure about the management fee part of it yet as to whether it is needed as well as the % split between myself and the friend/family.

If you dont ensure that your legal bases are covered, then you are asking for trouble imo.

What happens if anyone wants there money back now?

If you lose money?

in both cases, you could be sued (or worse)

I dont think an investment club arrangement precludes one person doing the day-to-day stuff, so long as this is documented

Trading friends and family funds

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awg

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