Bringing on Investor into Trading Business

[JC1984]

I have built a decent multi-year track record as a futures trader. I have set up a Bulgarian corp with Portugal NHR. Everything is going well and now I would like to get more capital to trade with. I have family members who are doctors in Canada that are interested. How do I set it up that I can manage their funds? I do not have any investment license, ect. I'm just a trader.

 

[JohnnyDoe]

Can you show your track record? How much money have you used so far?

 

[JC1984]

Very conservatively speaking, I'm looking at gains of over 80% per year as a lower threshold. I've reached the millionaires club but then the tax authorities were quick to cut me in half. Now I'm tax optimized and I won't be penalized like that again. I'm trying to reach for the 10-mill goal post. I have more than one doctor in close family who would be interested but I need to figure out the proper structure for them so that my proposal makes sense, is easy to implement, and delivers any tax savings possible. Ideally it would be possible to extend the benefits of my current corporate setup (Bulgarian corp) to them as well.

In this respect, I am aware of the Canada and Bulgaria/Estonia tax treaties that grant exempt surplus to dividends sent to Canadian corps who have foreign affiliates there, reducing the Canadian tax burden by approximately 20%. At the moment I'm trying to present simple strategies to begin with and gain investor confidence so I can build a large capital reserve.

As for track record, I'm currently just showing my potential investors my corporate profit statements, but that only goes back 1 year. Everything I did before was in my personal name and therefore I'm also showing them my personal tax assessments.

I'm not currently looking for investors outside of family. Maybe one day but currently my strategies can only be scaled so far do to market liquidity factors.

 

[JohnnyDoe]

You should be able to setup a private investment structure without being licensed, with a max number of participants varying according to local regulations. For example, if I remember correctly, in the US you are exempted from CTA registration if you control a maximum of 20 accounts. The best solution to avoid legal troubles and reduce costs is to have a POA on single accounts and put them together into an omnibus one.

 

[JC1984]

Thanks, I certainly like that idea. From my understanding this would require some US entity paying corp tax (which is at least less on futures).

 

[JohnnyDoe]

Thanks, I certainly like that idea. From my understanding this would require some US entity paying corp tax (which is at least less on futures).

No, you can do that as a private person, it is much simpler.

Sorry the threshold for registration is 15 people.
Source: CPO and CTA Exemptions and Exclusions

 

[JC1984]

That does sound simple. Any resources that you know to further explain the structure?

 

[JohnnyDoe]

That does sound simple. Any resources that you know to further explain the structure?

You can read all on the CFTC and NFA websites. If something is not clear better to hire a US lawyer for proper legal advice.

 

[JC1984]

While I understand a max of 15 people, it seems like there is a pretty low limit of capital that can be raised. Is 400k the maximum as you/others understand it?
Rule 4.13(a)(2)(ii): The total gross capital contributions it receives for units of participation in all of the pools it operates or that it intends to operate do not in the aggregate exceed $400,000.

 

[JC1984]

Interesting video:

 

[CyprusLawyer101]

Set up a Cyprus company, pool the investment and issue apportioned shares to each family members. No license should be required. There are no capital gains tax for securities/stocks trading and there are no taxes upon distribution of dividends. Relatively low cost structure.

 

[JC1984]

Interesting, what's relatively low cost? Can you break it down for the setup and maintenance please. Feel free to DM.

 

[JohnLocke]

Set up a Cyprus company, pool the investment and issue apportioned shares to each family members. No license should be required. There are no capital gains tax for securities/stocks trading and there are no taxes upon distribution of dividends. Relatively low cost structure.

I know a few guys personally that did this setup which works as expected for them. But as far as I remember it wasn't cheap roughly 10K they paid with all the paperwork in place.

 

[CyprusLawyer101]

Interesting, what's relatively low cost? Can you break it down for the setup and maintenance please. Feel free to DM.

Will pm u

 

[myhand]

please PM with offer for Cyprus setup.

 

[CyprusLawyer101]

I know a few guys personally that did this setup which works as expected for them. But as far as I remember it wasn't cheap roughly 10K they paid with all the paperwork in place.

It can be done for less than 10k. However by cheap I mean comparing to the alternative of having a licensed operation handling other people's money.