What happens to 'Fees'?

Robert Mann on

I need help in explaining this process to our club. One of
our members incurred a fee for not contributing last month.
Because he did not pay the $10 fee in time, it was withdrawn
from his account. In Bivio, we sold $10 from his account
and he was charged a $10 fee. Now, they want to know what
happens to the money. The simple answer is it's in our
brokerage account as cash available for investing or
covering expenses. Some think it will buy each of us
fractional shares in the club. I say no, but I don't know
how to explain what happens with the money.

Bob

Rip West on

Bob,

Since there was no money exchanged, nothing happened to the money. What did happen was that the members' equity was reduced because of the $10 partial withdrawal, and every member's value [including the offending member] was increased proportionate to the ownership percentage because of the $10 fee assessment.

Rip West
Saint Paul, MN

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