SALT LAKE CITY, Jan. 9, 2020 /PRNewswire/ -- The top-ranked proprietary trading firm, Maverick Trading, recently released guidance for its California based traders in response to the new California Independent Contractor law, AB5. In a firm-wide e-mail to its traders, the firm stated:
"As you have probably heard in the media, California's Assembly Bill 5 (AB5) passed last year and took affect at the beginning of 2020. This law essentially requires companies to treat independent contractors as W-2 employees unless they fall into an exempted category. This law had the potential to drastically impact the firm as well as our California-based traders. Our traders would have lost the flexibility they enjoy with their trading profits as well as a great number of deductible expenses. The firm would have had to adopt a compensation structure for these traders that would have been disadvantageous to new traders and actually would have limited the potential income these traders could earn.
"For a brief moment, we were presented with a decision whether or not to release our existing California-based traders as well as to discontinue accepting new California traders. Our traders are the firm's greatest assets and we refused to believe that the only option was to cast out a segment of our traders simply because of where they lived.
"A closer reading of the actual bill showed Maverick a path to keeping the traders affected by AB5. There would be no conflict between Maverick and AB5, provided the traders were trading through their own personal corporations or LLCs.
"While we have always actively encouraged our traders to trade through their own corporations or LLCs, it has never been a requirement. Effective immediately, any trader based in California that desires to trade the firm's capital will be required to trade through their own corporation or LLC. Maverick Trading will contract with the trader's private business entity, rather than the trader individually, to trade the firm's capital.
"We are sorry for the additional burden this policy places on our California traders, but the alternative would be to deny these traders access to the capital, coaching, supervision, and support they have earned as Maverick Traders."
Maverick Trading CEO, Darren Fischer commented, "We initially didn't think AB5 was going to impact the firm or our traders, but as we looked into it, we realized that it could potentially impact us all a great deal. One of the great things about Maverick's business model is that we are able to recruit talented traders without geographic constraints. California represents 12 percent of the population of the US. That's a lot of people potentially being denied the ability to enjoy the benefits of trading at a proprietary trading firm."
When asked how Maverick Trading came up with this solution, Fischer continued, "Thankfully, last year we entered a strategic partnership with Traders Accounting. As we came down to the wire for AB5 to take effect, Traders Accounting and Maverick were communicating on a daily basis. I have to take my hat off to Raven Johnson, the president of Traders Accounting. It was actually her team that delved down into the specifics of what Maverick and its California traders needed to do."
Asked about the impact of AB5 on the trading industry, Johnson stated, "Of course, we always recommend our clients trade through a business entity and Traders Accounting is ready to help them through the process, but AB5 really has the potential to take down entire trading firms in California if their management teams aren't being proactive. There have already been multiple legal challenges to AB5 from different industry groups, but if AB5 is upheld, it could potentially be extended and applied to any industry where the compensation structure is strictly performance-based or profit-split dependent. Maverick Trading was the first proprietary trading firm that reached out to us to address this issue on a systemic basis, but we've definitely seen an uptick in inquiries from traders in California wanting to know how AB5 affects them and what they can do to minimize the impact."
Fischer concluded, "At Maverick, we tell our traders that trading is a team activity and that was definitely true in this case. I was glad that we had an existing relationship with Traders Accounting and could get expert advice on the best way to retain our existing California traders as well as continue to offer other California traders the opportunity to trade with a prop firm.
About Maverick Trading: Established in 1997, Maverick Trading is a top-ranked proprietary trading firm with divisions in Stocks/ Stock Options as well as foreign currencies. For information on Maverick's Stock/Stock Options division, visit www.mavericktrading.com. For information on Maverick's FX division, visit www.maverickfx.com.
About Traders Accounting: Founded in 1998, Traders Accounting is the nation's leading resource for professional tax advice, business formation, and accounting services tailored to the unique needs of active traders. Traders Accounting's mission is to provide specialized services for active traders which maximize tax efficiency, reduce liability risk, and provide wealth building and wealth preservation opportunities. For information on Traders Accounting, please visit www.tradersaccounting.com.
Media Contact: Joe Jensen, [email protected], 940-217-5826
SOURCE Maverick Trading