SEC v. W. J. Howey Co.

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Securities and Exchange Commission v. W. J. Howey Co.
Supreme Court of the United States
Argued May 2, 1946 Decided May 27, 1946
Full case name	Securities and Exchange Commission v. W. J. Howey Co. et al.
Citations	328 U.S. 293 (more) 66 S. Ct. 1100; 90 L. Ed. 1244; 1946 U.S. LEXIS 3159; 163 A.L.R. 1043
Case history
Prior	Injunction denied, 60 F. Supp. 440 (S.D. Fla. 1945); affirmed, 151 F.2d 714 (5th Cir. 1945); certiorari granted, 327 U.S. 773 (1946).
Subsequent	Rehearing Denied October 14, 1946
Holding
An investment contract for purposes of the Securities Act means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party, it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical assets employed in the enterprise.
Court membership
Chief Justice vacant Associate Justices Hugo Black · Stanley F. Reed Felix Frankfurter · William O. Douglas Frank Murphy · Robert H. Jackson Wiley B. Rutledge · Harold H. Burton
Case opinions
Majority	Murphy, joined by Black, Reed, Douglas, Burton, Rutledge
Dissent	Frankfurter
Jackson took no part in the consideration or decision of the case.
Laws applied
Securities Act of 1933

Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293 (1946), was a case in which the Supreme Court of the United States held that the offer of a land sales and service contract was an "investment contract" within the meaning of the Securities Act of 1933 (15 U.S.C. § 77b) and that the use of the mails and interstate commerce in the offer and sale of these securities was a violation of §5 of the Act, 15 U.S.C. § 77e.^[1] It was an important case in determining the general applicability of the federal securities laws.

The case resulted in a test, known as the Howey test, to determine whether an instrument qualifies as an "investment contract" for the purposes of the Securities Act: "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party."^[1]