What are compliance guidelines when starting a new side hustle?

Currently contemplating starting a side hustle while working in a product group in IB as a first year analyst. The business would have nothing to do with IB and be completely unrelated. I also don't expect that it would generate any money until at a minimum 6 to 9 months from now. I also am considering enter a LLC partnership with a non-majority stake equity in the agreement.

Does anyone have any familiarity / insight with this and the compliance procedures that normally are required - is it required I reported this to my firm / manager even if I don't expect any revenues generated for several months? Does having an equity stake in a LLC put me into any type of risks with my current firm, and is there a way I can just not inform my firm given the business has nothing to do with my current position? 

I would appreciate any insights into this so I can handle this appropriately. 

 

Your side hustle must be reported to your BD, regardless of the type of business.  Your company would have to determine if it is okay to do it.  If it is in finance, my guess would be that they would not let you do it.  If you want to be scuba instructor, they would not likely have an issue with it.  You generally have to report all investments you hold to your employer and they would probably want them held in house   I am not sure what kind of equity stake this would be.  If it is a passive interest, it would just have to be reported to your company.   

You should have a conversation with your compliance officer. 

 

Thanks for the response - appreciate the answer. It would not be related to finance but rather a type of consumer product / tech app. At what point do you need to report it - more specifically, it is in extremely early stages right now with very little time put into it. Don't really want to risk anything with my group so don't want to disclose anything until it actually becomes something serious / revenue-generating. Obviously not doing anything related to it via work computer or anything like that. The equity stake would be non-majority but still a sizable amount of the LLC.

 
Most Helpful

Send it. Fuck FINRA

More seriously: if you're not filing anything legally with your name or SSN on it (e.g., LLC paperwork or registering for an EIN), I personally wouldn't even think about notifying compliance, because the only way they'll find out is if you run your mouth. Even if you are filing an LLC, I know of analysts and associates that formed their own as well as were listed as partners in others' that didn't report to compliance and nothing happened.

I never looked into the consequences of being accused or caught of breaking this rule so double-check me on my shit on the sly if you can but asking compliance for their blessing opens you up to them telling you no and then you either pussing out of the venture or at that point intentionally breaking a rule and ignoring official firm guidance. Not saying it's likely but if you're launching something that's related to industrials, for example, and your tag is correct that you work within an industrials group, they could tell you no just to cover their asses and say they didn't permit an employee to compete in the same sector your clients work in. Again, I don't know the likelihood of that being the case but if I had something that I really wanted to pursue, I wouldn't open myself up to potentially being told no and then needing to explicitly break that rule to pursue it. To each their own.

Best of luck with the venture. Always exciting to be working on your own thing.

 

Thanks for the response. I'm a bit risk-averse so don't want to jeopardize my current job, but then again i also dont want my manager / group to be aware in case they think im not being staffed enough (definitely not the case regardless). How did the analysts / associates you know handle it in terms of not telling their firm? Also i do think there would be some type of paperwork trail given it would be an LLC and a contract for me to lock in equity. 

 

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