Need legal guidance on new business (securities)

[TexasInvest]

Hi all

I posted this in my introduction message but not sure if that is the correct place for it.

I am starting my first *real* business soon, and as I go through the business plan writing and due diligence, have run into some questions that could be show stoppers. Pretty obviously, this is still in beginning stages but figured here was a good place to find some help!

Without going into much detail, based on the business being conducted, the Company will be accumulating small amounts of money from a large amount of individuals that is held for years before being paid out. What I am worried about is the following:

1) Regulations surrounding holding other people's money. I will essentially be acting as a bank and am not sure the regulations surrounding that. Any help on applicable laws would be helpful.

2) Regulations surrounding investing that money. So basically acting as an investment manager.

This will be a slow, steady growth (hopefully eventually grows quickly) so I won't have millions in funds immediately. I have read a number of SEC and other regulations and it seems that $25MM is the number where you have to start seriously reporting to at least your state. If the business hits $25MM, things will have gone very well and I can cross that bridge then with funds in hand to hire the appropriate compliance.

Just looking for huge red flags from a regulatory point of view prior to spending $$$ hiring a securities attorney.

Thanks everyone

 

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[mike24601]

I would strongly suggest contacting an attorney in this field face to face instead.

 

[TexasInvest]

Thanks. I know this will have to happen sooner rather than later, but hoping to get some advice/insights if anyone had them.

 

[Nily]

The financial industry is regulated to the death.

Any advice you receive here is useless because they might not satisfy Texan and federal laws. The landscape for financial service firms has changed drastically since 2010 when Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act. In 2017, they're planning to enact the Financial CHOICE Act (600 pages) that could potentially repeal the Dodd-Frank legislation. So you really need to talk to a securities attorney. He/she will help you set up the right business structure and advice on issues that you are not aware of.

Hiring an attorney is a form of investment in your field of interest.

 

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[Vigilante]

Anybody that gives you legal advice that is not a licensed attorney could be subject to both civil and criminal lawsuits. Find an attorney.

I have to close this thread so the forum isn't involved in dispensing legal advice.

 

[MJ DeMarco]

Managing other people's money, like a hedge or investment fund has multiple layers of oversight and regulation.

have run into some questions that could be show stoppers

Shouldn't be "show stoppers" if you plan to do it right with all the correct legal compliance and filings.

It won't be easy, but hey, that makes it all that more attractive.

Also check out the concept of "family office."

Complete Guide to Starting a Family Office