Our 4 year old club has a vexing problem.

We currently have equal shares, regardless of what each
member contibuted initially. (Some people joined when the
market was up, some joined when it was down and "buying in"
was a bargain.)

There is now disagreement about: 1) whether we should
distribute the shares equally and then move on to units from
that point - or - 2) whether we should go back to the
original contributions of various members and do the unit
method based on those figures.

Some members resent the fact that their total contributions,
to date, are greater. But, to be truthful, we admitted the
newer members "in good faith" and they are now members in
good standing - just as active as the others. It's a moral
dilemma as well as an administrative one. Help!

Marcia De Fren wrote:
> Our 4 year old club has a vexing problem.
>
> We currently have equal shares, regardless of what each
> member contibuted initially. (Some people joined when the
> market was up, some joined when it was down and "buying in"
> was a bargain.)
>
> There is now disagreement about: 1) whether we should
> distribute the shares equally and then move on to units from
> that point - or - 2) whether we should go back to the
> original contributions of various members and do the unit
> method based on those figures.
>
> Some members resent the fact that their total contributions,
> to date, are greater. But, to be truthful, we admitted the
> newer members "in good faith" and they are now members in
> good standing - just as active as the others. It's a moral
> dilemma as well as an administrative one. Help!
 
There is no easy answer to this question, unfortunately. I
think that's why none of the Club Cafe regulars have answered
it.
 
An investment club is a social organization as well as a financial
and legal entity. If you were to treat your club as a mutual fund,
you would award shares based on the NAV (unit value) on the
day the funds were received. Legally and financially, that's the
simplest and probably most "correct" think to do.
 
On the social side, you have to deal with humans--which is a good
thing. You don't want small differences to cause unnecessary turmoil
in your social group. It can take all the fun out of it. What you
might do is consider adjusting the share amounts so everyone
feels "mostly" comfortable. This will require a concerted effort by
the club's leaders to make sure everyone is heard. No one is
going to be entirely happy.
 
Once you come up with a compromise on the ownership
percentages, we at support@bivio.com can help you make
the appropriate adjustments to your club's accounting.
 
I hope this helps.
 
Cheers,
Rob Nagler
bivio Inc.

THANK YOU,ROB, FOR YOUR SOLOMON-LIKE WISDOM. I REALLY
APPRECIATE YOUR ADVICE!
MARCIA


Robert Nagler wrote:
!
>
> There is no easy answer to this question, unfortunately. I
> think that's why none of the Club Cafe regulars have answered
> it.
>
> An investment club is a social organization as well as a financial
> and legal entity. If you were to treat your club as a mutual fund,
> you would award shares based on the NAV (unit value) on the
> day the funds were received. Legally and financially, that's the
> simplest and probably most "correct" think to do.
>
> On the social side, you have to deal with humans--which is a good
> thing. You don't want small differences to cause unnecessary turmoil
> in your social group. It can take all the fun out of it. What you
> might do is consider adjusting the share amounts so everyone
> feels "mostly" comfortable. This will require a concerted effort by
> the club's leaders to make sure everyone is heard. No one is
> going to be entirely happy.
>
> Once you come up with a compromise on the ownership
> percentages, we at support@bivio.com can help you make
> the appropriate adjustments to your club's accounting.
>
> I hope this helps.
>
> Cheers,
> Rob Nagler
> bivio Inc.