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Strategies & Market Trends : Thailand
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To: Heretic who wrote (280)10/27/1997 12:17:00 AM
From: Aaron Weiss  Read Replies (1) of 457
 
Reed,

I am not an expert on the subject, but I believe that it *is* possible for you to purchase non-SEC approved foreign funds and unit trusts, subject to the following formidable obstacles:

1) You must open an offshore bank account with a bank which has no presence in the US. Accounts in which you wish to purchase mutual funds and/or securities tend to have rather high minimum balance requirements ($25K or so). Commissions are generally not as competitive as those in the US.

2) You must declare the existence of this account to the IRS (on schedule B it asks if you have have an interest or signature authority over a foreign account). You must answer yes (assuming the account has more than $10K of value) and file another form (TD 90-22.1) describing the specifics of the account to the Treasury Dept. Failure to do this is considered "money laundering" and is a felony!

3) I also believe that you must pay taxes on any capital gains and dividends realized by the fund each year, whether or not the fund actually distributes them! Many foreign unit trusts simply include realized cap gains and dividends in the share price and never actually pay them out as US funds do; the share price just keeps going up and up (hopefully).

As for the actual legality of purchasing non-SEC-approved funds, I *think* the law states that no person or organization can SELL such securities to a US citizen inside the US! What US citizens buy abroad, in properly-declared foreign financial accounts, is their own business and is not subject to approval by the SEC.

Again, I'm not an expert, so you'd have to verify all of this with someone who knows what he's talking about. But this is what I've heard.
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