In answer to the question "can" you do something, the answer is - of course - "yes." Your real question is "what are the legal consequences of doing so?" First, as long as you are reporting all of the income earned from the trading, then you will not have a Federal or state income tax problem. However, is the 1099 the only income you are receiving? Are you executing the trades in their accounts? Or are you executing the trades in your own account? If the latter, then you are likely going to be viewed as taxable on all of the profits and losses.
Second, of course, as indicated by the other lawyers, you have licensing issues. Since you are not licensed, you are violating state law requirements. Also, you may be guilty of a crime under state law.
Third, you may be violating Federal licensing laws. And, as one of the other lawyers indicated, if you are conducting business with people outside of California, you may be violating yet another Federal law. And there are potential Federal crimes as well.
You should immediately cease your activities and hire a competent securities lawyer.
Trading on behalf of others would make you an "Investment Advisor." Unless your business comes within an exemption, you are required to register with the California Corporations Commission before starting your business. The securities business is risky, highly regulated, and complicated. I highly recommend that you retain a good securities lawyer to advise you if you are serious about starting this business. I have 36 years experience in the securities business and would be happy to give you a free consultation.
One issue you may have is that if your friends are not in CA, you may be running afoul of the state securities laws of other jurisdictions. And do you have any written agreements in place with the people for whom you are trading? Does your brokerage firm know you're trading money for 5 different people? How are you keeping track of funds in and out for performance and management fees?
What you are doing is fraught with numerous risks.
The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client relationship.