Legal Research & Case Analysis Flashcards
7 cards from real Series 66 – Uniform Combined State Law Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Legal Research & Case Analysis flashcards as text
Under SEC v. W.J. Howey Co., which of the following is NOT an element of an investment contract?
Answer: A written certificate evidencing ownership
Howey looks at economic reality, so no formal certificate is required for an investment contract.
In Reves v. Ernst & Young, the Supreme Court used which approach to decide whether a note is a security?
Answer: The family resemblance test, beginning with a presumption that notes are securities
Reves presumes notes are securities and rebuts that presumption only if the note resembles a judicially listed non-security category.
In Landreth Timber Co. v. Landreth, the Court held that the sale of 100% of a closely held business's stock:
Answer: Is covered by the securities laws because the instrument is stock
Landreth rejected the sale of business doctrine, so stock is a security even when control passes.
Marine Bank v. Weaver held that a certificate of deposit issued by a federally regulated bank is:
Answer: Not a security because of the regulatory protections already in place
Federal banking regulation and deposit insurance made the securities laws' protections unnecessary for the CD.
United Housing Foundation v. Forman held that shares in a cooperative housing project were not securities because purchasers:
Answer: Were motivated by acquiring housing to use, not by profit
Buyers wanted residences, not an expectation of profit, so Howey was not satisfied despite the label 'stock.'
In SEC v. Edwards, the Court addressed investment contracts offering fixed returns and concluded that:
Answer: Fixed returns can still satisfy the profit expectation element
Edwards held that a promised fixed return is still an expectation of profit under Howey.
SEC v. C.M. Joiner Leasing Corp. is cited for the principle that an instrument:
Answer: Can be a security if, in practice, it is offered as an investment scheme, even when the underlying asset is real property
Joiner found oil lease assignments were securities because of how they were promoted as an investment.
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