Definition of a Security: The Investment Contract (Part II)

The following is Part II of my article on investment contracts.  It will analyze the final two elements of the Howey Test: The expectation of profit and profit derived from the efforts of others. Expectation of profits As confirmed by the Supreme Court, the definition of “profit” is broad and general: “Simply a financial return …

Definition of a Security: The Investment Contract (Part I)

This article is the second in an occasional series on the definition of a “security.”  As I explained previously, when a financial instrument qualifies as a “security,” it becomes subject to an extensive apparatus of securities regulation.  The most notable of this group are the Securities Act of 1933 and the Securities Exchange Act of …

Definition of a Security: It’s All in the Family (Resemblance Test)

This article is the first in an occasional series on the definition of a “security.”  The answer is important.  When a financial instrument qualifies as a security, it unlocks a set of laws and regulations that would not otherwise apply.  These include two statutes that are discussed extensively below: the Securities Act of 1933 and …