An investment contract is a flexible standard for defining a security.

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An investment contract is a flexible standard for defining a security that was established by the U.S. Supreme Court in SEC v. W.J. Howey Co. (1946). It applies to any investment in a common enterprise with an expectation of profits solely from the efforts of others. The contract can take various forms and is not limited to a specific type of investment. Therefore, it is considered a flexible standard.

An Investment Contract Is a Flexible Standard for Defining a Security