I was asked to join an investment club, and a few of the things I heard did not make sense, after reading a few books and check on-line I still have some questions.
The person who asked me to join, said he would keep a share per 10 people who joined for managing the club, he was going to do all the research, and investing.
He did not mention anything about registering the club or protecting the members in any way.
From what I have researched this doesn't sound on the up and up to me, is this how investment clubs are run?

thanks
TC - motelmom | Date: 12/3/2008 9:59:47 AM | Number: 7217

What the person who invited you to join his investment club is doing is taking a share of the member's capital as compensation for his doing all of the work. It is one way for the "Leader-of-the Pack" to find a way, perhaps legal, perhaps not, around the Investment Advisers Act. If the person is Warren E, Buffett, consider it - Otherwise NOT.

The structure is somewhat similar to the organization of a "Hedge Fund". Hedge Funds, as Private Investment Limited Partnerships, are not currently regulated by the Securities and Exchange Commission(SEC). This non-regulation of Hedge Funds may change sometime in the future.

Kahuna, CFA