I checked into this once several years ago.  My American Family insurance agent had a policy that was very similar to NAIC's bond, but only slightly more expensive.  If your club is not (or does not wish to be) a member of NAIC, then the policy would have been less.  But I agree with others here.  Most clubs' market values are low enough that it doesn't merit the insurance.  Our club balances to the penny every month, and we all have 24/7 access to our club books.  If we ever get to 6 figures, we might look at it again.  By then, we won't have to worry about the cost!

If your members are seriously worried about this, maybe you don't belong together.  I've been clubbing for nearly 13 years now. and I've been very active in the NAIC community.  I have never heard of a single case where the bond was used, and I don't know of any club that has ever bought it. 

Lynn Ostrem
President, Crow River Investment Club
www.bivio.com/crowriver

I am the incoming treasurer, having had that position twice in the past. Our club looked into the bonding insurance but did not buy it.

We have an assistant treasurer. This partly to train a new person to do the job, partly to protect in case one computer crashes just before a meeting, and partly so that two people are reconciling the accounting report with the brokerage report. This has worked well for us.

Basically we trust all our members and, with less than 20 members, know each other well. We don't see the need for bond insurance.

Any errors made are corrected at the end of each month and monthly reports are handed out for review. Hope this helps.

Peg, Repeat treasurer

I agree with some of the thoughts written in this thread and disagree with others. As a CPA, I have been involved in embezzelment cases. I am not impressed with the fact that we are friends and trust one another. In all embezzlement cases, it is not the shifty-eyed suspicious character who takes the money. No, we never would have trusted him with the funds. It is our friend of many years who for one reason or other has felt he had to 'borrow' some money temporarily, always with the intent to pay it back.

So, as stated before, I am not in favor of bonding insurance for investment clubs, but I am in favor of setting up internal control procedures whereby it becomes difficult, if not impossible, for our friendly, trustworthy treasurer to yield to temptation and dip into the funds.

Rip West

I have been a co-treasurer of a small club for over 10 years.  We have three co-treasurers.  One collects the checks and makes the deposit into the checking account.  We require two signatures on every check.  She balances the checking account. I handle the accounting software which has to reconcile every month with the checking account.  I also handle the broker account and do the trades.  Our third co-treasurer is an accountant and she does our taxes. She also double checks my entries into the accounting software to catch any mistakes.  It would be very difficult for any of us to take funds so we do not buy the bond insurance and we are very comfortable with our system.  While we have to communicate every month, most communications can be handled by fax or e-mail even when I am traveling. 

Robin Kamin