Keywords:  gics, howey, bics, arisen, enterprise
Section 2(2) of the 1933 ACT states that an arrangement such as an INVESTMENT CONTRACT is a SECURITY. However, problems have arisen in defining the term. The Supreme Court's HOWEY TEST, used to analyze whether a particular document is an investment contract, states that an investment contract is a contract if it meets the following criteria: a PERSON invests money; the money is invested in a COMMON ENTERPRISE; the person is led to expect profits from the investment; and the profits are generated SOLELY FROM THE EFFORTS OF OTHERS.
Contract between an investor and a financial entity, usually an insurance company, that promises to repay the principal plus a specific rate of return on the invested assets over the life of the contract. Also referred to as guaranteed investment contracts or GICs, these conservative investments are “guaranteed” only by the credit or the issuing financial institution. Although they resemble bonds in having fixed face value and paying a predetermined rate of interest, these contracts cannot be sold and therefore their value is not market-driven.
a contract in writing under which the investor grants funds or other property rights to another person for investment in economic activity against the promise of income