Asked in Banking and Consumer Law for California

Q: Can I take benefit of difference in interest rates in different different banks?

I can gather money from the people and deposit in the bank giving 6% interest, and promise the people to pay 3.5% and pay them back 3.5% when I will get 6%. Is this legal?

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1 Lawyer Answer
William John Light
William John Light
Answered
  • Santa Ana, CA
  • Licensed in California

A: This seems to be of dubious ethics. You aren't providing any service that these people can't get from the bank themselves.

You appear to acting as sort of an investment advisor. While I am do not practice law in that field, I would refer you to an answer to a similar question on Quora:

https://www.quora.com/In-the-U-S-can-you-invest-trade-other-peoples-money-without-any-special-license

"Whoa! Stop! You CANNOT advise, trade, manage, or otherwise influence investments without being a Registered Investment Adviser. (RIA) . In the US, the regulations are established by both the SEC, FINRA and each state. RIA’s are licensed by each state pursuant to their “blue sky” laws. In most cases you will find that you will have to have a Series 7 and/or 63 license from FINRA and an RIA from the state if you are acting as an investment adviser. You will have to file a registration statement ADV-2 which is available for public inspection. ( see SEC.gov | Form ADV).

Please, do NOT proceed in this business without having the proper licenses. If will only lead to major grief, since the regulatory authorities will assume you are a Bernie Madoff wannabe, regardless of your intentions."

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