The risk capital test is a much more difficult standard to meet than the Howey test because it requires neither commonality nor that the profit be derived from the efforts of others.

Question

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The Howey Test is generally considered more challenging to meet because it requires an investment of money in a common enterprise with the expectation of profit derived from the efforts of others, which are broader criteria than those of the risk capital test. The risk capital test focuses on the risk to the investors' capital, not specifically on the efforts of others or commonality aspects.

The Risk Capital Test Is a Much More Difficult Standard