Can I raise capital for my own investment fund with a felony background?

12 years ago, I was arrested and convicted of a felony pertaining to financial dishonesty. The amount in question was $50, and I was 18 years old. I've been trading on my own for some time now, am demonstrably successful (I've been audited by a huge accounting firm), and would like to start a small hedge fund, in the hopes of growing it big. Since the felony on hand has been expunged, and it's been 10 years, I'm free to work at any financial institution as per FINRA, SEC, etc.

Given my specific history, would I ever be able to attain the level of success that the top investors have (in terms of AUM)? Assuming, hypothetically, of course, I attain similar results.

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Best Response

I have to give you the unpleasant news your conviction may be "expunged" but it will still show up in a background check.

To be candid, you won't be able to get any job in finance that requires a background check, and if you started a fund, you wouldn't be able to get any investors who did (effective) due diligence. You could still have a finance career but it would be severely constrained. It's not hopeless: Henry Blodget, high profile sellside equity analyst, reinvented himself as a business journalist after being fined $4MM by the SEC and barred from the securities industry for life. He found investors for Business Insider and recently sold it at a $442MM valuation. Blodget isn't a felon though.

Aside from Blodget whom I've never met, I have a good friend who got left holding the bag for allocating trades at a BB, got a lifetime bar but he's still in finance and doing OK.

 

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