What IS a Security
Chapters in this video
- 0:00 Certificate of deposit for a security: the receipt trap
- 1:15 Notes and evidence of indebtedness: vague but presumed securities
- 2:17 Howey Test and the alpaca limited partnership
- 3:42 Active versus passive LLC members: prong four failure
- 4:31 Bank CD versus certificate of deposit for a security
- 5:24 Fixed versus variable insurance: who bears the investment risk
- 6:29 Rapid-fire exam recap
What this video covers
- Why notes and evidence of indebtedness are presumed securities even though they sound like generic IOUs
- How the Howey Test's four prongs (investment of money, common enterprise, expectation of profits, profits from a third party's efforts) classify limited partnerships and passive LLC interests as securities
- Why an active LLC member who manages the business fails prong four of the Howey Test and therefore does NOT hold a security
- The critical distinction between a bank certificate of deposit (CD), which is a banking product and not a security, and a certificate of deposit for a security, which IS a security
- Why variable annuities and variable life insurance are securities (the policyholder bears the investment risk) while fixed insurance products are not (the insurance company bears the risk)
- How to apply the Supreme Court's 1959 ruling in SEC v. Variable Annuity Life Insurance Co. to modern exam scenarios
- The full range of named securities under the Uniform Securities Act, including warrants, rights, options, voting-trust certificates, and oil, gas, or mining interests
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