{"id":352708,"date":"2016-04-04T10:42:08","date_gmt":"2016-04-04T15:42:08","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/consumer\/securities-law\/what-is-the-howey-test.html"},"modified":"2024-05-01T12:55:00","modified_gmt":"2024-05-01T17:55:00","slug":"what-is-the-howey-test","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/consumer\/securities-law\/what-is-the-howey-test.html","title":{"rendered":"What Is the Howey Test?"},"content":{"rendered":"\n
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What Is the Howey Test?<\/h1>\n
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\n By Oni Harton, J.D.<\/a> | Legally reviewed by Melissa Bender, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

The U.S. Supreme Court articulated the Howey<\/i> Test for determining whether U.S. securities laws govern the transaction. It originates from the 1946 Supreme Court case, SEC v. Howey<\/i><\/a>.<\/p>\r\n

Courts use the Howey Test to determine whether certain transactions qualify as investment contracts. If so, the Securities Act of 1933 and the Securities Exchange Act of 1934 apply to those transactions. Securities are subject to certain disclosure and registration requirements.<\/p>\r\n

This article explains the Howey Test in securities law<\/a>. The results of the test determine the regulation of certain transactions.<\/p>\r\n

What Is a Security?<\/h2>\r\n

The Securities Act<\/a> and Securities Exchange Act<\/a> broadly define security. Consult the Basic Terms for Shareholders and Investors<\/a> for additional securities terminology. Under these Acts, a security includes many familiar investment instruments. These include the following:<\/p>\r\n