Home
Investment Clubs
When does an investment club have to register the offer and sale of its membership interests with the SEC under the Securities Act of 1933?
|
When does an investment club have to register the offer and sale of its membership interests with the SEC under the Securities Act of 1933? Since the Securities Act requires the registration of the offer and sale of most securities, the investment club must first decide if its membership interests are "securities." Generally, a membership interest is a security if it is an "investment contract." Generally, a membership interest is an investment contract if members invest and expect to make a profit from the entrepreneurial and managerial efforts of others. If every member in an investment club actively participates in deciding what investments to make, the membership interests in the club would probably not be considered securities. If the club has any passive members, it may be issuing securities. Sometimes offers and sales of securities do not have to be registered because they are exempt under the law. For example, a non-public offering is exempt. |
Open a Market Place account Current Investment Clubs Article Index Do-It-Yourself-IRA's - By Michael Fritz Using Your IRA or 401K inside an Investment Club Are investment clubs regulated by the SEC? How do you know if an investment club is making a public offering? Do securities laws apply to a person who provides advice to an investment club? |