Good Idea or Bad Idea?: Setting up Scottrade Account One Month Before IB Stint
I want to set up a ~5-10k account with Scottrade in the next few days and my IB job starts in late July. My plan is to invest in 5-8 stocks I think are undervalued and just hold on to them for the long-run. Is this a bad idea from a compliance perspective? I know I will have to disclose my positions, but will I be asked to close the account when I start? Any thoughts?
Thanks
Depends on your BB. Would have been a great idea at my HF, haha.
not worth it. you will lose your money
bump
Fairly confident that you will not need to liquidate anything. You need to submit to compliance so that they can make sure you do not purchase securities that are on your firm's watch/restricted list. It is a minor hassle to have every trade approved after you get started, but it only take a couple minutes each time.
In this market, I would personally try to be a passive investor and keep a diversified portfolio with some long-term investment/growth plays (AAPL, CMG, SBUX, etc.) and some long-term stable/high-div yielding stocks (VZ, ABT, KMP, etc.) + 10% GLD and keep some cash to average down on a dip.
Some BBs will require you to move the account to their shop. Try to see if you can get the employee trading rules at your bank which will outline specifics. When I worked at my BB we had to have the account there and were allowed an outside account only on an exception basis, and we had to get MD sign off for all trades (as MD8 mentioned), with a 30 day minimum holding period. Short selling and options trading was also VERY limited.
Owning some individual stocks should be fine - like others have said you may be required to transfer your holdings from Scottrade to your employer or a different firm-approved broker.
It probably would be good practice to avoid buying any stocks specifically within your industry group though (if you're in one). You might still be able to hold onto the investment, but it would just create a headache for the compliance guy, who I'm sure wouldn't be thrilled to go through that hassle for a relaively small account that was just opened for an analyst who just started working.
I remember there was a 90-day or so grace period for closing/transferring accounts at my firm - so if this is an internship you might be able to go around that. regardless I ended up closing my accounts at that time to avoid any conflicts of interest...
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