Q: I am planning to manage investment portfolios for friends and family through an Interactive Brokers (IBKR) account
I am planning to manage investment portfolios for friends and family through an Interactive Brokers (IBKR) account while residing in Maryland. I will have less than $25 million in assets under management and fewer than 15 clients. Given these parameters, do I qualify for the de minimis exemption under Maryland state regulations, and are there any specific compliance requirements or restrictions I should be aware of?
A:
Thank you for reaching out regarding managing investment portfolios for friends and family through an Interactive Brokers (IBKR) account while residing in Maryland. Based on your parameters of having less than $25 million in assets under management and fewer than 15 clients, you may likely qualify for the de minimis exemption under Maryland state regulations. This generally exempts you from state registration. Similarly, you may likely exempt from registering with the SEC as an investment adviser due to the de minimis exemption under the Investment Advisers Act of 1940, which applies to advisers with fewer than 15 clients and less than $25 million in AUM. We would need more information to provide you with a formal opinion.
However, it is important to comply with certain requirements despite these exemptions. You must adhere to anti-fraud provisions under both state and federal laws and maintain accurate and detailed records of all transactions and communications with clients. Additionally, you need to provide clear and comprehensive client agreements, disclose any potential conflicts of interest, and uphold your fiduciary duty to act in the best interests of your clients.
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