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Albert Marmero
Albert Marmero,
Category: Business Law
Satisfied Customers: 193
Experience:  Partner at Long, Marmero, & Associates, LLP
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I understand that trading and investing other people’s money

Customer Question

I understand that trading and investing other people’s money is very limited by the law,
My question is, if for each customer / investor I will open a new entity and partner it up with my entity,
So in other words the customer / investor has his own entity for his money, and we will only link the trading accounts, is that a good way to do it?
Submitted: 7 months ago.
Category: Business Law
Expert:  Albert Marmero replied 7 months ago.

My advice would be that creating separate entities for each client would not be the best approach, and is likely not permitted by the SEC. Keep in mind, there is a cost to registering, creating, and maintaining entities so costs will build-up if you do this for each client. And since these entities will deal in trading and investing, these entities would each also need to be approved by, and regulated by, the SEC. Not to mention, each entity would then need to carry the insurance required for this field.

In theory, the idea of separate entities is typically wise, so as to insulate risk, but I think in this specific example, it will not work as it would be an administrative and financial nightmare.

This is likely not the answer you hoped for but I am obligated to give you my professional guidance, so I hope this is helpful. Please provide a rating so I receive credit for promptly responding to you. After rating, feel free to ask follow-up questions. Thanks!