As someone I knew long ago used to say, "When in doubt, check it out!" Here's a link to the SEC's explanation of the relationship between investment clubs and the SEC. http://www.sec.gov/investor/pubs/invclub.htm

 

Ira Smilovitz

 

In a message dated 1/15/2012 9:35:25 A.M. Eastern Standard Time, mikeshoppell@gmail.com writes:

Ira,
Thanks for your reply.  Our club was under the impression
that when the club membership reached more than 20 members
the SEC requires that the club register as a mutal fund.  I,
as a member of the club, did not deem that to be correct but
was advised that the requirement is a new rule by the SEC.
I have been in other clubs where the membership exceeded 20
and it was not a problem.
R. M. Shoppell, Merrill Ranch Investment Club, Florence, AZ.

I think anyone that has any question about whether their activities can be considered to be those of an investment club or something more sophisticated that is subject to more extensive registration and reporting requirements is also advised to consult an attorney which is familiar with their specific state laws. That is the best source for legal advice on your specific situation.

For those who are discussing very large clubs, I'd also recommend you investigate whether the size of your group would trigger a requirement for efiling of your federal and/or state partnership returns. Federal 1065 forms must be e-filed if they include more than 100 K-1's. This is something you would not be able to do using bivio.

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Laurie Frederiksen
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