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I have a couple friends who want to give me money to invest. Can anyone give me some pointers on the legal implications of this?

You might try floating this question on the Liquid Lounge board, and search that board for previous threads on the same topic (it comes up a lot). A number of professional investment advisors hang out there.

1) Any comments on whether I need licenses (used to have series 6 & 63, now lapsed)

Generally speaking, if you collect any fees for this activity, you need to be registered, and being registered means passing for example the series 65. Generally speaking, if you are managing less than $25M, you will be regulated at the state level, and if more than that, at the federal level (i.e. by the SEC).

I say "generally speaking" because the laws vary by state, and there are some loopholes and "de minimum" exemptions that may apply to you. The applicable state laws depend on where you reside and do business and where your friends/clients reside. I would seek the advice of a lawyer familiar with these matters. Also, passing the series 65 will get you familiar with these laws and the ethics involved. Running afoul of the securities laws is probably not worth making a few dollars on the side.

2) I would be taxed at my marginal rate, and the friends are content with me taking 30%/15% of the top of short/long term gains. Aslong as everyone fills out gift tax forms for the IRS, is there any other taxable implications?

It sounds like you are talking about your friends literally giving you the money (i.e. writing you a check and you comingling the money with your own funds). This is highly inadvisable. Investing money for others is a highly regulated activity, and passing the money back and forth as gifts would not be looked upon very favorably by the regulators.

Better would be for your friends to open up brokerage accounts in their names, and, once you carry the proper credentials and set up a contract with them, give you trading authority on those accounts. That way they will each be responsible for their own taxes, and you will remain at arm's length from them.

Randy
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