SarahAK:
Is what I am doing legal?
MY POSITON IN THE TRADING ACTIVITY
The $1,000 is the fee they charge for an account where $100,000 of the broker’s money is deposited into an account the account purchaser controls. The account and trades are controlled in a way that prevents losses over a certain amount.If the account owner loses more than a certain amount, the account is closed immediately.
The benefit of this account is a person with $1,000 can place trades of a lot more than the $1,000 they have
My family member expects to generate profits on this trading, says 25% of the profits will be paid to me in return for the loan I provided for buying the account.
If profits accrue to this trading account, and 25% of the profits are sent to me, that money does not seem like it trading profit, but I don’t know the rules, because I am not doing any trading. To me, it seems like a return on a business investment
TWO ADDITIONAL NON TRADERS INVOLVED
My trading family member has similar arrangements with two other people. Each of them sent $400 to my family member That money was used to buy accounts similar to the one I paid for. Those accounts were lost when my family member lost the amount that triggers automatic shutdown of the accounts. My family member promised to send a certain share of trading profits to them, similar to what she promised me. The current plan is to pay them out of the earnings in the account I paid for.
If it legal for my family member to accept money from other people promising to repay them a fixed percentage of the profits.? To me, that sounds like what brokers do.
Offshore brokers are fine as long as they pay out — a lot of good prop-style setups work that way. Honestly, lately even some regulated brokers have been caught doing shady stuff, and regulators barely step in, so I am keeping my faith with user reviews and their experiance rather than regulations!