Securities covered by the securities acts include not only investment instruments such as stocks and bonds but also "investment contracts."

Question

Quizplus · Accepted Answer

Investment contracts are expressly covered by the securities acts as a type of security. This was established by the Supreme Court in the Howey Test, which defines an investment contract as a transaction in which a person invests money in a common enterprise and is led to expect profits primarily from the efforts of others. This definition encompasses a wide range of financial instruments, including some that may not be traditionally thought of as securities.

Securities Covered by the Securities Acts Include Not Only Investment