Creating A Great Impression In Court

If you have ever had to attend court in order to prove your innocence, you know how much your appearance and attitude can impact the proceedings. Unfortunately, all too many people misinterpret how they should dress and what they should do in court, which is why I decided to make this blog. This website is all about creating a great impression in court and understanding how to present yourself to the judge and jury. After all, you might be trying to defend your innocence to avoid potential jail time. Check out this blog for great tips that could help you to protect your freedom.

What Makes Something a Security Legally Speaking?

Law Blog

It's common for a corporate lawyer to hear the question, "What makes an asset a security for legal purposes?" The issue has been a big part of American corporate law since the passage of the Securities Act of 1933 and the Securities Exchange Act of 1943. Both laws have proven extremely durable, but appellate courts have had to clarify and expand the definition since. Let's look at how a security is defined and what a security is or is not.

The Howey Test

Most modern definitions of a security trace their origins to SEC v. Howey Co., a 1946 U.S. Supreme Court Case. In the case, a citrus grove developer was marketing an investment contract that paid proceeds from the developed groves back to investors. The Court determined that arrangements where an investor pays money to a third party in exchange for profits that come solely from the third party's efforts are legally securities. That means they have to be registered with the SEC.

The test devised in the case asks if there is an investment of money in a common enterprise. For example, most cryptocurrencies aren't securities because there isn't a common enterprise involved. Conversely, shares of Apple stock are securities because the corporation is pulling in one direction to profit from a brand and its assets.

Types of Securities

Broadly, there are two types of securities. Equities are ownership stakes in an enterprise. When you buy shares of stock, you end up with a sliver of the ownership claim of that stock.

Debts are also sometimes considered securities, but only under specific circumstances. The big test for a securitized debt is whether the debt can be traded through a financial instrument. If a corporation issues a bond, for example, that bond may be traded as a fungible instrument. Consequently, it is a security.

What Isn't a Security?

Most trading in real assets is not securitized. Gold is a classic example of a non-security, as long as you're trading directly in the metal.

Notably, many securities are built on institutions that trade in real assets. A company that acquires and sells artwork, for example, would be a security if it sold investment contracts. The art, however, remains a non-security, and it is only the interest in the company's profits and ownership that is securitized.

Regulation

All issuers of securities must file regular reports with the SEC. However, the expected regularity of reporting varies based largely on the size of the enterprise and whether it is publicly traded. Anyone planning to issue securities should consult with a lawyer beforehand.

If you need to learn more about securities, why not look here and learn more?

Share

18 September 2020