What is an Investment Contract?

This lesson examines the Supreme Court's decision in SEC v. Howey Co. defining the term "investment contract," and the subsequent evolution of that definition.

Learning Outcomes

On completion of the lesson, the student will be able to:

1. Explain why it is important to determine if something is an investment contract.
2. List the four elements of the test from SEC v. W. J. Howey Co.
3. State an example of a horizontal common enterprise.
4. State an example of a vertical common enterprise.
5. Explain the disagreement among lower courts between a horizontal common enterprise and a vertical common enterprise.