SEC Provides Guidance for Investment Clubs

The SEC provided guidance to investors regarding registration and compliance requirements for investment clubs.

In an Investor Bulletin, the SEC stated that it generally does not regulate investment clubs, but described certain special situations. Registration as an "investment company" under ICA Section 3 may be required if the club (i) invests in securities, (ii) issues membership interests that are securities, or (iii) cannot rely on an exclusion from the definition of "investment company." The SEC also noted that a person providing advice regarding a club's investments may be subject to investment adviser registration requirements.