investment contract
Definitions from Case Law · United States Supreme Court
Definitions from Case Law
From 328 U.S. 293 - Securities & Exchange Commission v. W. J. Howey Co. · 1946Most cited · 3,691 citing opinions
a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party, it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical assets employed in the enterprise
How the Supreme Court has restated “investment contract”
Each Supreme Court definition of “investment contract,” sized by how often later courts cited it. “Change” is measured by wording overlap with earlier definitions — a rough signal, not a semantic judgment.
How often courts cite the cases defining “investment contract”
Court decisions citing the 4 opinions that defined “investment contract” — 7,684 in all, by decade. Counts are citations to the defining cases as a whole, not verified uses of the term. The dip in the most recent years is a data-coverage gap, not a real trend — our corpus holds fewer opinions from the latest years.
All 4 definitions, chronological · 1943–1967
- 1943·320 U.S. 344 - Securities & Exchange Commission v. C. M. Joiner Leasing Corp.[p11]· cited 1,663×ORIGINAL
Novel, uncommon, or irregular devices, whatever they appear to be, are also reached if it be proved as matter of fact that they were widely offered or dealt in under terms or courses of dealing which established their character in commerce as 'investment contracts,' or as 'any interest or instrument commonly known as a security
The test is what character the instrument is given in commerce by the terms of the offer, the plan of distribution, and the economic inducements held out to the prospect. In the enforcement of an act such as this it is not inappropriate that promoters' offering be judged as being what they were represented to be.
The test (for an investment contract) is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others.