Legal Question in Investment Law in New York

I want to consult my friends on some stocks i have been watching. i want to set up a contract for them to pay me a % based on profit. i know business with friends is always fishy business when it comes to money. im assuming this would be considered a consultation fee for my services guiding them through when to buy and sell on specific stocks. i am not a broker, just a business savy friend that wants to make a couple bucks and help some of his friends make some money. now my deal to them was that i get nothing off their initial investment and only off their profits. they have seen my past track record from investing as i have taught myself strategies through personal education. how would i set this up? thanks


Asked on 4/28/11, 5:54 am

1 Answer from Attorneys
Andrew May May Law, PC

Dear Sir or Madam,

I know the answer to your question under the federal securities laws. Where are you located and where are the clients? I ask because state laws are implicated as well. A federal exemption from registering as an investment adviser if you had 15 or so clients in a 12 month period is no longer available. Also, under federal law there is a prohibition from taking a percentage of the gains, unless the clients have significant assets. State law may also affect the ability to charge such a fee.

I focus my practice on securities and commodities law and represent many money managers. I have also continued my studies and am a few credits shy of receiving my L.L.M. (Masters of Law) in financial services law.

I encourage you to contact an attorney You can reach me at [email protected] or (847) 675-1052. Please feel free to check out our website at www.maylawpc.net for more information.

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Answered on 5/22/11, 1:56 pm


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