Indio, CA asked in Business Formation, Business Law and Securities Law for California

Q: Starting an equities investment club in California. Will create a CA LLC and an online brokerage account for trading.

We are going to pool our money into a single brokerage account. The account will be managed by one person who does not have a securities license. Is this ok?

Also, the members of the club would like to compensate the person who will be managing the account, keeping the records, etc. Is there a way to do this legally?

1 Lawyer Answer

A: Unless everything you are planning to do can be fit under the statutory heading of "Investment Clubs" (assuming California allows them) you and the trader who is making money are looking for big-time trouble.

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