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Managing friend and family accounts question


Grenville
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Hi board members,

 

I am starting to manage a few friend and family investment accounts. Does anyone know where the specific language for exemptions from registration with state or federal license authorities is?

 

I'm in California. I know it's possible to manage accounts in California without registration given that IB allows one to register for a friends&family account for fewer than 15 accounts where fees can be collected on all 15 accounts.

 

Is it a federal exemption that applies in California and other states or is there a ruling that clarifies this situation? Any help or insight would be great.

 

I have looked at the Dept. of Corporations Laws under investment adviser, but I doubt that's the right place to find the rules. I'm also not publicly advertising myself as an investment adviser.

 

Here are the rules for Investment advisers in California:

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=25001-26000&file=25200-25209

 

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=25001-26000&file=25210-25221

 

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=25001-26000&file=25230-25238

 

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=corp&group=25001-26000&file=25240-25256

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Not an expert at all, so I'd check with a securities lawyer.

 

If I remember if you manage less than $25m or 15 accounts you don't need to register with the SEC, but you do need to register with your state securities regulator.

 

If I were you I'd just call the state regulator and ask them.  You're going to get the best answer for probably a 2m phone call, and the advice will be tailored to your exact needs. 

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Thanks oddballstocks & pof4520,

 

I called the commissioner's office in California and spoke to an examiner.  They confirmed that you need to be registered in California if you accept fees. There's additional info at the link below. I'll have to think about this more.

 

Also thanks for the tip in regards to the power of attorney.

 

http://www.corp.ca.gov/Laws/CSL/BDIA/State_IA.asp

 

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