active vs passive membership
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active vs passive membership Thanks for reply to my previous post. Investment clubs are made for active role of all members. But is is practically not possible for every member to participate in every stock purchase decision. some members like to play passive role or limit activity due to time, location etc. Is it possible to have active member-manager and other passive club members in investment club? without violating SEC laws? Do I need to be RIA or pass any exam/register if club is manager-managed with other passive members? I live in Ohio. Where do i register my investment club? Thanks If you have any questions whether or not what you propose to do would be considered an investment club by the SEC: We recommend that you seek the help of appropriate legal counsel to answer your questions.http://www.sec.gov/investor/pubs/invclub.htm Laurie Frederiksen
Invest with your friends! www.bivio.com Become our Facebook friend! www.facebook.com/bivio Follow us on twitter! www.twitter.com/bivio Follow Us on Google+ Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe On Mon, Mar 24, 2014 at 6:34 PM, Raka maka wrote: Thanks for reply to my previous post. Passive vs. active in the context of SEC regulation has to do with the rights of the members, not whether they actually execute their rights. Passive members in the SEC sense would be members who have no, or perhaps limited, authority to participate in the operating decisions of the club. They are like investors in mutual funds; the shareholders in mutual funds don't have a say when it comes time to buy or sell the securities the fund owns. A member of an investment club who has the right to participate in the investment decisions of the club but voluntarily decides not to exercise those rights is still an "active" member. Whether the other members of the club want to carry dead weight that isn't contributing to the management of the club and its portfolio is a decision they have to make.
If you have questions regarding the setup of a specific club, you should speak with competent local legal counsel who will be able to advise you regarding state-specific rules.
Ira Smilovitz On Mon, Mar 24, 2014 at 6:34 PM, Raka maka <rakamaka@inbox.com> wrote: Thanks for reply to my previous post.
We have voted members out of the club for being
completely passive members. Suggest you read mission statement in
latest Better Investing article. A club is contributing members.
A manager-controlled entity would be a mututal fund or other
financial vehicle. To me at least. L. Lee Prism Investors On 3/24/2014 6:34 PM, Raka maka wrote:
Thanks for reply to my previous post. Investment clubs are made for active role of all members. But is is practically not possible for every member to participate in every stock purchase decision. some members like to play passive role or limit activity due to time, location etc. Is it possible to have active member-manager and other passive club members in investment club? without violating SEC laws? Do I need to be RIA or pass any exam/register if club is manager-managed with other passive members? I live in Ohio. Where do i register my investment club? Thanks I totally agree with "L". We finally modified our partnership agreement to state that all partners must be active contributors and must attend at least 80% of our monthly meetings. We were becoming a mutual fund that benefitted all because of the work of a few. This change allows for vacations, emergencies and business trips. We rotate hosting the meeting and the presenter at each meeting is the host from the previous meeting. S/he is expected to have researched three or more companies in a particular sector and to present each with a recommendation, even if the recommendation is to pass. We have had more than one meeting where this exercise allowed us to learn about new and different sectors but where we then found that what started out to be very interesting ended up being very overpriced. If you
think of your group as a partnership and not as a club, your attitude might change toward non-contributors, especially if you are the one doing all the research and presenting. Mike Jones Wall$treet Wannabees Bloomington, MN From: "jlalee@gforcecable.com" <jlalee@gforcecable.com> To: club_cafe@bivio.com Sent: Monday, March 24, 2014 8:53 PM Subject: Re: [club_cafe] active vs passive membership
We have voted members out of the club for being
completely passive members. Suggest you read mission statement in
latest Better Investing article. A club is contributing members.
A manager-controlled entity would be a mututal fund or other
financial vehicle. To me at least. L. Lee Prism Investors On 3/24/2014 6:34 PM, Raka maka wrote:
Thanks for reply to my previous post. Investment clubs are made for active role of all members. But is is practically not possible for every member to participate in every stock purchase decision. some members like to play passive role or limit activity due to time, location etc. Is it possible to have active member-manager and other passive club members in investment club? without violating SEC laws? Do I need to be RIA or pass any exam/register if club is manager-managed with other passive members? I live in Ohio. Where do i register my investment club? Thanks
Our club (general partnership) is located in
South Carolina and we had to obtain tax IDs from the fed and state
agencies. We file both state and federal, but only members pay
taxes so we just send in paperwork. I guess not all states
require filing but ours does. It's a pain because our partnership
is not what the state form is designed for and is hard to fill
out. I called state to get info to do it right. Not aware of any
other registering done (but I joined well after club started up). Laura Lee Treasurer, Prism Investors On 3/24/2014 9:53 PM,
jlalee@gforcecable.com wrote:
We have voted members out of the club for being completely passive members. Suggest you read mission statement in latest Better Investing article. A club is contributing members. A manager-controlled entity would be a mututal fund or other financial vehicle. To me at least. |
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