Howey
Investement Contract which is a security
invest money
common enterpirse* can be narrow or broad
expecation of profits
primarily* from the effort of others
Landveth Timber
united housing v forman
just because it is called stock does not make it a security
income was considered to speculative in the contract to be consiered income–far removed from expectation of income
Transaction to consume husing—economic purpose was to consume federal securities laws do not apply
SEC v Edwards
fixed price in profits is still profits
under howey
Risk capital test-CA
US v Leonard
finacial instrument transaction= investment cotnract?
Primaryly not soley from the efforts of others
General partenership versus limited different
GP= member manged so no security
Reves v. Ernst & Young
agriculture coperative
NOTE at issue
1.presumption-note security sec 2 2nd cir family resmeblance-9 month note= security
familalry test for notes 8th circ risk capital
2.puprose of note-ie business 2nd cir family resemblance to the following
3.plan of distribution-common trading for speculation or
notes delivered in consumer financing
4. reasonable expectations of investing public
note secured my mortgage in a home
short term secured by AR
small business short term note secured busienss assets
note debt in ordinary business
5% material total mix of information
lack disclosures= material-baried facts doctrine
Basic v. Levinon
1 Ommited fact Material-an ommited fact is material is there is a
substnatial liklyhood that a reasonable shareholder would consider it important in deciding how to vote
and
Probability/magnitude test
Wielgos v. Commonwealth Edision Co
knowledge abroad in the market can moderate or eliminate projections as being missleading
Truth on the market
5. some factor significantly reduces the risk of the instrunment–
such as other regulatory scheme
2 there must be a substnatial liklyhood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the “total
mix” of information made available
Eisenstadt v. centel Corp.
going smoothly
it has to be a lie to be actionable
puffery to sell company
Omnicare, Inc.Laborers Dist. Council constr. Indus. Pension Fund
sec 11–omisssion or mistatment in a FERS
we believe= opinion–>therfore, not material
be speak caution doctrine–have to be specific
applies to FLS- MCS wooven in
all FLS have to be reasonable
ONLY issuer and authoerized by issuer can claim BCD
written and oral
Oral has to reference writen document where MCS is located
identified as FLS
MCS must identify it specifically
FLS-immaterial as matter of law if done like this
burden then shift to plaintiff to show known false
Asher v. Baxter International, Inc.
principal or important factors are enough for cautionary language
you don’t have to list everything
FLSs
1 MCS
tailored
directly to FLS
3 MCS
—give
