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Home » BROKER EDUCATION

Alternative Investment Laws for Brokers

In the alternative investment world, there are so many markets it can make your head spin. Whether its private placement, managed futures, forex or any other niche, one thing’s certain, alternative investments are showing up everywhere. With this trend now apparent, the real question is, why wouldn’t you broker alternative investments? Well, if you can play by the rules, brokering can be quite a lucrative profession.  As you’ll see, there’s a lot of money in investment brokerage, but there’s ALSO strict regulation.

Since you CAN’T broker deals with insufficient education, we’ve provided a great article on alternative investment law. To get you started, we’ll review some of the basic legal facts for brokers, covering all of the major markets in the process.This will allow you to protect yourself and others while brokering, making all of your transactions more successful.  First things first, let’s scroll down to see how the law effects the market you’re interested in!

Laws for Alternative Investment Markets

Private Placement:  If you choose to broker private placement investments, you MUST act within the law. First, you should always attain PPP investors indirectly without solicitation. This is extremely critical due to the strict laws associated with private placement programs. If you solicit investors before they inquire about PPP, the fact is, you’re breaking the law. To remain effective and legal, you should always contact investors citing “networking” as your main objective. Once trust opens up the conversation and they request information, you can discuss any PPP investment you want. Also, when providing PPP documentation to an investor, it should never state yields or commitments.  By quoting yields either verbally or via documentation, you’re breaking the law again, and this time it far more serious.

Forex Investments:  If you want to become an “introducing broker” for a managed forex investment, there are two routes you can take. First, you could become an “introducing broker” for a forex trader within the USA, earning commission for every investor you find. Though this sounds great to most, you must have an NFA (National Futures Association) license before you can start soliciting investors. This can take months of studying, but it can pay off big in the end. In contrast, you can become an “introducing broker” for FX traders using PPM’s or offshore forex brokers. Once again, you would be collecting commissions for investor referrals. By working with traders who utilize offshore forex brokers, you are not subject to the laws in the USA. This does allow you to earn commissions, but the reality is, attaining forex investors can be very tough if you’re unlicensed. Overall, whether you want to broker domestic or offshore forex investments, you must always keep the law in mind. Though managed forex is very lucrative, if you slip up, you could be in hot water overnight!

Managed Futures:  If you choose to broker managed futures investments, you can take one of two paths. First, you can broker managed futures in the USA, raising capital to earn commission.  This requires an NFA license, which adds strict oversight into the picture.  Though there are drawbacks to having an NFA license, the fact is, licensed futures brokers have the potential to earn Millions every year. For this very reason, it’s always a good idea to get a NFA license if you are working in managed futures. Since the license is recognized by investors worldwide, you can raise limitless equity if you’re smart. In contrast, if you choose to broker a managed futures investment without a license, the trader must be offshore.  In this case, since you’re working with an offshore futures trader, USA laws don’t apply to you.  Though it would seem appealing to broker deals without regulation, in all reality, it’s harder  than it sounds.

Other Alternative Investments:  If you want to broker investment related products, you must define your niche. Whether it’s REO’s, private equity, hedge funds, loans or more, there;s always a deal to broker. Though you CAN get rich brokering investments, you must know one thing above all, the law. In every investment market, there are laws you must abide by if you want to succeed in business. Do yourself a favor, and thoroughly research your alternative investment niche before pursuing it. The reality is, you could need a license, or you may choose to work with private investments. Remember, alternative investments are great, but just like anything else in life, there are ground rules.

As you can see, there’s a lot of opportunity in alternative investment brokerage, but you must act within the law. The reality is, each market has its own parameters, and they’re easy to succeed within. If you want to broker alternative investments, do yourself a favor and know the law “like the back of your hand”. The fact is, if you do some basic legal research, it will help you avoid mistakes which could slow down your success. Remember, you never want to break the law in the beginning, or you could lose everything you’ve worked for in the end.

In summary, if you want to become an alternative investment broker and you don’t like strict laws, too bad!  The fact is, each alternative investment market has rules that apply to everyone. By working creatively within the law, truthfully, you will have far more success in the end. All in all, just set some goals and be patient. If you don’t feel educated enough in the market you’re brokering, you should NEVER push deals. It’s always better to gain experience slowly, rather than risking everything on the first few deals. Remember, brokerage is a double-edged sword that can lead to quick riches, or legal disaster. Do yourself a favor and get educated in your niche. If you dedicate enough time and effort, the fact is, you can never fail…

InsideTrade LLC Staff
Phone: (949) 444-2111
Info@InsideTradeLLC.com

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16 Comments »

  • Halifax Bank Plc said:

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  • InsideTrade Staff (author) said:

    We let our members speak as they please and do not erase comments for any reason. Thank you for visiting our site. Take care….

  • Peter Nelson said:

    Dear mr Smith,
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  • NCDEX Tips said:

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  • ehab said:

    Kario

    My main buisness is project Financing , I would like to know whats the total amount required? and in which countries are the projects ? Do the have the 10 Mill cash in their bank account ? Can you please send me the buisness plans to ehab@gmx.com I can Assist .

  • HALIFAX BANK PLC said:

    Sir,

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    Loans/Credit Operations Manager
    Halifax Bank Plc
    104/108 High Street ,Bromley
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    E-mail: hfbankplc2011-101@yahoo.co.uk

  • marin said:

    did anyone ever finished a deal………….??????

  • Investment laws | Mdigspr31 said:

    [...] Alternative Investment Laws for Brokers | InsideTrade LLCMar 4, 2010 … Learn about alternative investment laws for brokers. Click for forex, futures and alternative investment market laws. [...]

  • Carlos Cortez said:

    How could we know and has that guarantee that indeed You- Mr. Jake Smith is indeed the Loans/Credit Operations Manager of Halifax Bank Plc. Can Mr. Smith refer us to an Executive of the Bank to prove he is in that position and his that he is authorized to accept loan borrowers? An Executive Officer say Chairman of the Board or President of the Bank.

  • Carlos Cortez said:

    Please we want to know if that Mr. Jake Smith is indeed the Loans/Credit Operations Manager of Halifax Bank. Can we be introduced to the Executive Ofiicer or Chairman of the Baord or to the Bank President that indeed Mr. Smith is authorized by the Bank to accept loan applicationfrom prospective borrowers.?

  • Carlos cortez said:

    Thank you and please!

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