3 ms·

If you want to manage other people's money there are structures setup for this that wouldn't have caused people to owe more than they had in their accounts. Bu

If you want to manage other people's money there are structures setup for this that wouldn't have caused people to owe more than they had in their accounts. But they did take this short cut and it cost them, it cost some of them more than they gambled. I stand by the language I used. I guess a good test to see if this is a good structure or not would be to look at any of the respectable people who manage money to see if they use a similar setup. Open question to you. Point to one reputable fund that still uses this type of structure..... I'd rather invest in a hedge fund, or Venture Capital fund, or pension fund that has a proper setup than an adhock setup like optionsellers.com used. Liability is only on of the many issues that a proper corporate setup fixes. I guess to give you the maximum benefit of the doubt using this structure is like running a business, taking money, signing contracts, etc without a corporation. I mean you can, but one mistake wipes out your family. With a proper corporate setup you are much more protected.

whatok 8y ago
SMAs are a common fund structure. It's a terrible idea for a strategy like this but for other strategies/asset classes where you either don't have as much potential volatility or drawdowns, I don't see the problem with them.
tomp 8y ago
You're mixing up a few things. Investors/clients are usually other funds, which have their own corporate structure, etc. In any case, protection/limiting liability is the responsibility of each individual (institutional) investor. All I'm saying is, it's perfectly reasonable to have money in a managed account. That might even be much more respectable! Imagine I'm a small, unproven but promising fund manager... What is going to be easier, convince a $10bn pension/endowment fund to give me the money (that I then channel into offshore corporations "for tax purposes"), or to give the money into an account at some reputable investment bank like BAML or GS and only allow me (or anyone else) to invest/direct/manage that money (in strictly defined terms that are under control of the custodian bank, e.g. delta limits, or asset class/stock restrictions, etc.)?

whatok 8y ago

SMAs are a common fund structure. It's a terrible idea for a strategy like this but for other strategies/asset classes where you either don't have as much potential volatility or drawdowns, I don't see the problem with them.

tomp 8y ago

You're mixing up a few things. Investors/clients are usually other funds, which have their own corporate structure, etc. In any case, protection/limiting liability is the responsibility of each individual (institutional) investor. All I'm saying is, it's perfectly reasonable to have money in a managed account. That might even be much more respectable! Imagine I'm a small, unproven but promising fund manager... What is going to be easier, convince a $10bn pension/endowment fund to give me the money (that I then channel into offshore corporations "for tax purposes"), or to give the money into an account at some reputable investment bank like BAML or GS and only allow me (or anyone else) to invest/direct/manage that money (in strictly defined terms that are under control of the custodian bank, e.g. delta limits, or asset class/stock restrictions, etc.)?