Are Managed Accounts Legal?

The laws that apply to managed accounts, especially the ones under the forex umbrella, have been in a constant state of flux during the last decade.

Nevertheless, managed accounts are a legally accepted structure investors can turn to for professional management and, often times, diversification from traditional asset classes and long-only investments.

Even though each country's laws are different, managed account laws have a lot of similarities across the globe.

First of all, the money manager in charge must only have limited authority to make trading decisions on behalf of investors – and not full authority to handle deposits and withrdrawals from customers directly. This separation of client funds from the portfolio manager is one of the keys to making a managed product safe.

Failure to observe this essential requirement is what sometimes gets inexperienced investors in trouble, as they fall prey to a pyramid or Ponzi scheme under a forex facade.

Laws exist to protect managed account investors, but like in any business, investors must apply common sense when venturing into this market.