What is the legal test for determining whether an investment is a security or an investment contract?
California, United States of America
The following excerpt is from Moreland v. Department of Corporations, 194 Cal.App.3d 506, 239 Cal.Rptr. 558 (Cal. App. 1987):
In making the determination whether an investment is a security in the form of an "investment contract," California appellate courts have set forth two separate and distinct tests. The first such test is the "risk capital" test articulated in Silver Hills Country Club v. Sobieski, supra, 55 Cal.2d 811, 815, 13 Cal.Rptr. 186, 361 P.2d 906; the second is the federal or "Howey "
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