The SEC definition is not what you think it is. Any member that has the right to influence the decisions made by the club is a participating member, whether or not she chooses to exercise that right. A non-participating member (for the SEC) is someone who has money invested in the club but who is not permitted to vote on decisions of the club.

 

In the mutual fund analogy, mutual fund investors have no say in the buy/sell decisions made by the fund manager.

 

Ira Smilovitz

 

1/18/2012
We in the Model Club of Northern Virginia, MicNOVA, have a
member who is in retirement I believe and last year took a
6-month leave to travel, then returned for approximately 4
months but did not resume her Stockwatcher position.

Now she is requesting another 8 month leave from the club,
and the members feel positive about granting her this leave.

I know there are SEC laws about a club having
non-participating members being considered a Mutual Fund,
and therefore being vulnerable to legal issues.

Could someone clarify that in light of MicNOVA's situation?

Thanks, Etana