Real Estate Interests as Securities

1. Real Estate Interests as Securities • Question arises under • federal law and • state law. • Federal law: classically, mandates full disclosure. The issuer of securities files a registration statement that includes a prospectus designed to summarize the offering for the public, particularly its risks. • The traditional federal policy is merely one of disclosure. • So long as you disclose the risk, even if it is very high risk, you may then offer the securities for sale. • State law: varies, but at the classic historic extreme, required an offering to be “fair, just and equitable” before it could take place within the state. • Today, much of state law has been preempted. Donald J. Weidner

2. Real Estate Interests As Securities • Federal and state statutory definitions of “security” tend to parallel one or another • even though the underlying policies of state and federal law have diverged significantly. • Federal and state case law developments on what constitutes a “security” inform one another • but there are differences. • Joiner Leasing and Howey are two major real estate cases from the 1940s that indicate that interests in leaseholds and in fees simple can be securities within the meaning of the federal securities laws. Donald J. Weidner

3. SEC v. C.M.Joiner Leasing Corp.320 U.S. 344 (1943) • Promoter acquired a lease on 4,700 acres of potentially oil-bearing land. • Promoter sold investors partial assignments of its leasehold interest • in parcels ranging from 2.5 to 20 acres. • In addition, the Promoter also promised each investor that he would explore for oil. • When the SEC attempted to restrain the Promoter, he asserted that he was only selling “mere” interests in real estate, not securities. • Securities are only things like stocks and bonds, he said. Donald J. Weidner

4. Joiner Leasing (cont’d) • Supreme Court held for the SEC: Promoter was selling more than “naked leasehold rights,” he was also trading in the economic inducements of the proposed exploration well. • The package arrangement, of the leasehold interest coupled with the contract to explore, falls within the concept of “investment contract.” • Often-quoted language: “The reach of the Securities Act does not stop with the obvious and commonplace. Novel, uncommon or irregular devices are also reached if . . . they were widely offered or dealt in under terms or courses of dealings which established their character in commerce as ‘investment contracts,’ or ‘as any interest or instrument commonly known as a ‘security.’” Donald J. Weidner

5. SEC v. W.J.Howey Co.328 U.S. 293 (1946). • Promoter publicly offered for sale strips of Florida citrus acreage; • buyers received fees simple absolute by warranty deeds. • To avoid the Joiner Leasing problem, the Promoter avoided mandatory service contracts. • However, for an extra cost, investors could enter optional service contracts under which • the Promoter agreed to cultivate the acreage and pay the net profits to the purchaser of the land. • Most, but not all, of the purchasers of land also purchased service contracts. • As in Joiner Leasing, the Promoter argued that he sold mere interests in real estate, not “securities.” Donald J. Weidner

6. Howey (cont’d) • Supreme Court was unmoved by the fact the service contracts were optional. • It said that individual development was unlikely • Stating what is probably the most cited language in all Securities law: An investment contract is a “scheme whereby a person [1] invests his money [2] in a common enterprise and [3] is led to expect profits [4] solely from the efforts of the promoter or a third party.” • A rule courts have been parsing for decades. • Both Joiner Leasing and Howey seem to say: The form of the investment unit, whether a stock certificate or a warranty deed, is immaterial. The question is whether, in substance, the unit is a security. Donald J. Weidner

7. Solely Through the Efforts of Others • HYPO: An investor contributes $x to become a limited partner in a liquor store. The investor is required to work in the store for several days during each yearend holiday season. • Does the limited partnership form of the investment foreclose classification as a security? • Not according to Howey • Does the fact that the limited partner’s profits are not solely through the efforts of others foreclose classification as a security? • Given the use of the word “solely” in Howey? • Even state courts were quick to distance themselves from the “solely” requirement • If not “solely,” then what? • See the Glenn Turner case Donald J. Weidner

8. SEC v. Glenn W. Turner Enterprises, Inc. (on “efforts of others”)474 F.2d 476(9th Cir. 1973) • Involved the sale of “self improvement” contracts by Dare To Be Great, Inc., • a Florida Corporation that was a wholly-owned subsidiary of Glenn W. Turner Enterprises, Inc. • In short, purchasers acquired the right to take a self-improvement course [ranging in price from $300 to $5,000]. • The purchaser was required to exert great effort, attend meetings and self-improve. • Meetings were like revivals, much chanting, jubilation, even “money humming.” Donald J. Weidner

9. Glenn W. Turner Enterprises (cont’d) • “Although mention of ‘money-humming’ is made at several points in the record, we are not certain what this activity entails, nor do we venture to guess.” 474 F.2d at 479, n. 2. • Purchaser can profit by selling courses to others. • As to the “solely” test: “We adopt a more realistic test, whether the efforts made by those other than the investor are the undeniably significant ones, thoseessential managerial efforts which affect the failure or success of the enterprise.” Donald J. Weidner

10. Silver Hills Country Club v. Sobieski (on “profits”) 361 P.2d 906 (Cal. 1961). • Promoter sold 110 “Charter Memberships” in a country club for $150 each. The club was under construction and expansion. • Subsequent memberships were to be sold, and at higher prices. • The prices were expected to rise as additional facilities (ex., a golf course) were constructed. • Members had to pay monthly country club dues. • Members could be expelled only for misbehavior or for failure to pay dues. • Membership was transferable, but only to persons approved by the club’s Board of Directors. • Members had no rights to the income or assets of the club. Donald J. Weidner

11. Silver Hills (cont’d) • Because the promoters were to receive all the profit left over from the construction and operation of the club facilities, the purchasers were not getting and profit in the usual sense. • Other jurisdictions had said “no security” because there was no expectation of profit by the purchasers. • However, the California court focused on the promoter raising risk capital: “We have here nothing like the ordinary sale of a right to use existing facilities. Petitioners are soliciting the risk capital with which to develop a business for profit.” • “Since the act does not make profit to the supplier of capital [the offeree] the test of what is a security, it seems all the more clear that its objective is to afford those who risk their capital at least a fair chance of realizing their objectives in legitimate ventures whether or not they expect a return on their capital in one form or another.” Donald J. Weidner

12. Brown v. Rairigh (on “common enterprise”)(Supp. P. 97) PR man has 15 horses (but is not in business of promoting and selling percentage interests in race horses. Only once before had he sold an interest in any of his horses). Pays $11,675 Cash on 2/74 PR 10% interest in 5 horses  10% of all winnings Agrees to shoulder 10% of all expenses That is, equivalent to a share, not of gross receipts, but of profits. Option to purchase a further 25% interest in same 5 horses based on value at 2/74  Gets right to PUT the 10% interest back to the PR man; the PUT is exercisable by 1/1/75 at a price = FMV at time of the exercise of the PUT. PR man retains custody and control of the 5 horses. Donald J. Weidner

13. Brown v. Rairigh (cont’d) • ‘s put expired.  claimed he was sold an unregistered security and demands rescission under Florida’s “Blue Sky” law. Recall the now slightly modified basic definition of an investment contract from Howey: 1) an investment of money 2) in a common enterprise 3) with an expectation of profits 4) solely (or primarily) through the essential managerial efforts of a promoter or a third party. Investment of money is clear here. Was there a “common enterprise?” Donald J. Weidner

14. Brown v. Rairigh (cont’d) Brown v. Rairigh notes 3 different approaches to the “common enterprise” requirement: • A one-on-one dealing between offeror and offeree is sufficient. • It is sufficient if the transaction’s success depends on multiple investors, even if there is no interaction among those investors. • There must be both • more than one investor and • interaction between or among those investors. Donald J. Weidner

15. Huberman v. Denny’s Restaurants, Inc. (on common enterprise/efforts of others)337 F.Supp. 1249 (N.D. Cal. 1972). Operator Dev. agrees to build Dev. Operator Conveys 20 year lease Dev. Operator Agrees to pay rent: Dev. Fixed minimum + 5% of monthly gross sales Dev. sells fee Buyer Assume Buyer discovers she has made a bad deal, but there is no fraud or misrepresentation. May Buyer claim that she purchased a security? There was an investment of money. Was there a common enterprise? With profits to come solely through the efforts of others? Donald J. Weidner

16. Huberman v. Denny’s Restaurant (cont’d) • As to “common enterprise”: • “Plaintiff as owner of the building and land not only had the landlord’s natural interest in the well being of her tenant but the significant interest in the amount of additional ‘rent’ from the lease that was dependent on the volume of the restaurant sales. Therefore, since plaintiff [buyer] and defendants [operator] had a common interest in the success of the venture, a ‘common enterprise’ has been properly alleged for purposes of coming within the Howey test.” Donald J. Weidner

17. Huberman v. Denny’s Restaurant (cont’d) • As to “solely through the efforts of others”: • “She was not buying a franchise restaurant to manage and defendants have not claimed that plaintiff ever showed any intention of running the franchise herself. She was looking solely to the efforts of Denny’s and the other defendants for the profits: First, in the guaranteed rental that they had put in their lease, and second by the successful running of the franchise which would increase her ‘rental’ receipts with the increase in sales.” Donald J. Weidner

18. Brown v. Rairigh: First rationale for denying recovery (no “common enterprise”) • Brown rejected Huberman: “it goes too far because it reduces the word ‘common’ to mere surplusage and the word ‘enterprise’ is all that is left.” • Should it make a difference if the racehorse purchaser had purchased jointly with a friend or spouse? • In this case, is the victim the buyer or the seller? • “There is no concomitant protection for unsophisticated sellers who are persuaded to sell part of their business by purchasers, the latter knowing full well that they have an absolute out, plus interest and attorneys fees, if the business flounders.” Donald J. Weidner

19. Brown v. Rairigh: Second rationale for denying recovery (estoppel) Obviously uncomfortable with its “common enterprise” rationale, the court offered an alternative rationale for deciding against the plaintiff investor: “If an investor is fully informed as to all aspects of his investment prior to purchase and if he is fully aware of the use to which his proceeds will be put, then in such event his conduct, when considered together with other facts and circumstances, may well estop him from seeking relief under the Blue Sky Laws, providing however that the promoter or issuer is not in the business of promoting or issuing . . . .” Donald J. Weidner

20. Brown v. Rairigh: A Third Possible Rationale • Did the plaintiff and the defendant become partners? • The third rationale is that the situation is more properly governed by partnership law rather than by securities law. • We shall see subsequent cases in which the courts, in deciding whether to expand the concept of “investment contract,” ask whether there is some other law, other than securities law, that provides sufficient protection to the person claiming to have purchased a security. • In Brown v. Rairigh, it seems clear that the plaintiff and the defendant formed an inadvertent partnership. They were co-owners of a business for profit who also shared losses. Donald J. Weidner

21. Williamson v. Tucker (5th Cir.) (on unusual cases in which an interest in a partnership is a security) • A general partnership or joint venture interest can be a security in special circumstances: (1) if the agreement among the parties leaves so little power in the hands of a partner or venturer that power is distributed as in a limited partnership [emphasis on the agreement]; (2) if a partner or venturer is so inexperienced and unknowledgeable as to be incapable of intelligently exercising the partner or venturer’s powers [emphasis on the investor]; or Donald J. Weidner

22. Williamson v. Tucker (cont’d) (3) if a partner or venturer is so dependent on some unique entrepreneurial or managerial ability of the promoter or manager that the partner cannot • replace the manager or • otherwise exercise meaningful partner or joint venturer powers. [Emphasis on the manager]. • We’ll see further case law on this issue. Donald J. Weidner

23. United Housing Foundation, Inc. v. Forman(Supplement p. 101) • Mitchell-Lama Act project for low-cost cooperative housing. N.Y. Housing Finance Agency provided 40-year, Below Market Interest Rate loans to the developer, who also received substantial tax exemptions. • Developer agreed to operate on a nonprofit basis and lease only to people with incomes below a certain level who had been approved by the state. • The motivating force was United Housing Foundation (UHF), a nonprofit corporation composed of labor unions, housing cooperatives and civic groups. • UHF had sponsored the construction of several major N.Y. co-ops. Donald J. Weidner

24. United Housing Foundation, Inc. v. Forman (cont’d) • Those who wished to occupy the apartments were required to purchase shares of stock in the Riverbay Corporation • Which was organized by UHF • Riverbay Corporation was organized to own and operate the buildings that constituted the project known as “Co-op City” • The number of shares in Riverbay a purchaser was required to buy depended upon the size of the apartment the purchaser wanted to occupy. • Ex., the cost of the 72 shares needed for a 4-BR apartment was $1,800. • “[I]n effect, [the share] purchase “is a recoverable deposit on an apartment.” Donald J. Weidner

25. Forman (cont’d) • Shares were explicitly tied to the apartment, • they could not be transferred to a non-tenant, • they could not be pledged or encumbered. • they descended, along with the apartment, only to a surviving spouse. • Each shareholder-occupant was entitled to one vote—the vote attached to the apartment, not to the shares. • Any occupant who wanted to vacate was required to offer the stock back to the corporation at cost. • In 1965, Riverbay circulated offering literature that estimated an anticipated construction cost of $280 million. • With an average cost of $230 per room Donald J. Weidner

26. Forman (cont’d) • The final HFA blanket mortgage, the debt service on which was to be paid out of the “rent” from the shareholder-tenants, was 50% more than originally estimated, at more than $400 million. • With an average cost of $400 per room (almost double that announced in the offering literature). Donald J. Weidner

27. Forman (cont’d) • It is clear that, if this were a security, there was a violation of the securities law because of the failure to disclose the following material facts: • the estimated cost of construction was very low, and • this sponsor had a prior history of cost-overruns • CSI, the general contractor and sales agent, was a wholly-owned subsidiary of UHF. • CSI had insufficient liquidity to complete the project. • the State Housing Commission had waived the liquidity requirements to approve CSI as the contractor. Donald J. Weidner

28. Forman (cont’d) Most basically, the purchasers sued under §10b of the Securities Exchange Act of 1934: “It shall be unlawful for any person in the offer or sale of any securities by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly- • to employ any device, scheme, or artifice to defraud, or • to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or • to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.” Donald J. Weidner

29. Forman (at 2d Circuit) • The Question: was there a sale of a “security.” • The purchasers say their “stock” was “stock” within the statutory definition. • The 2d Circuit held there was a “security,” finding three sources of expected “profit” for the purchasers: • rent reductions through income generated from the leasing of commercial facilities, professional offices and parking spaces and from community washing machines. • tax deductions for the portion of each occupant’s “rent” that was traceable to interest on the mortgage encumbering the project. • rent reductions through subsidies. Donald J. Weidner

30. Forman (at Supreme Court) • The Supreme Court reversed, stating that, even though the interests the occupants purchased were called “stock”: • “they lack . . . the most common feature of stock: the right to receive ‘dividends contingent upon an apportionment of profits’.” • The Court said the interests also lacked “the other characteristics traditionally associated with stock”: • they are not negotiable; • they cannot be pledged or hypothecated; • they confer no voting rights in proportion to the number of shares owned; and • they cannot appreciate in value. Donald J. Weidner

31. Forman (Supreme Court, Cont’d) • “In short, the inducement to purchase was solely to acquire subsidized low-cost living space, it was not to invest for profit.” • Supreme Court said there was no expectation of profit • “By profits, the Court has meant either [a] capital appreciationresulting from the development of the original investment . . . or [b] a participation in earnings resulting from the use of investor funds . . . .” • Supreme Court adopted Glenn Turner “entrepreneurial or managerial” spin on the “solely or primarily” test. • “The touchstone is the presence of an investment in a common venture premised on a reasonable expectation of profits to be derivedfrom the entrepreneurial or managerial efforts of others.” Donald J. Weidner

32. Forman (Supreme Court rejected 2d Circuit’s finding of “profits”) • Tax Benefits • There is no authority that a payment of rent used to pay interest is a profit because it has become deductible. • The deductibility of interest as an owner in Co-Op City is no greater than that of any other homeowner. • Deductibility does not result from the managerial efforts of others. • Subsidies. • Can not be liquidated for cash. • Do not result from the managerial efforts of others. Donald J. Weidner

33. Forman (Supreme Court Rejected the 2d Circuit’s finding of profits) • Net Income from Commercial Rental, Parking, Washing Machines. • Is far too speculative and insubstantial. • May be properly viewed as a rebate • from facilities patronized only by the tenants. • Was never an inducement because it was never mentioned in the offering circular. • Facility leases were made to provide essential services to tenants, rather than to generate profit by providing services to others. Donald J. Weidner

34. Forman (rejects Silver Hills and finds only limited risk) • Supreme Court declined to adopt California’s Silver Hills (risk capital) approach. • Alternatively, even under risk capital, this investment does not meet the test because the purchasers “take no risk in any significant sense.” • “[I]n view of the fact that the State has financed over 92% of the cost of construction and carefully regulates the development and operation of the project, bankruptcy in the normal sense is an unrealistic possibility.” • “[T]he risk of insolvency of an ongoing housing cooperative ‘differ[s] vastly’ from the kind of risk of ‘fluctuating’ value associated with securities investments.” Donald J. Weidner

35. State Analog to 10b • Fla. Stat. 517.301(1) is a provision that echoes the ‘34 Act’s 10b • Florida’s nondisclosure rule, however, is more broad. It applies • “In connection with the rendering of any investment advice” and • “in connection with the offer, sale, or purchase of any investment or security” Donald J. Weidner

36. Wals v. Fox Hills Dev. Corp.(7th Cir. 1994)(Supplement p. 131) • 1990, Buyers purchased “‘week 5” of an apartment, which is in February, in a recreational condominium project outside Manitowoc, Wisconsin, that featured an extraordinary golf course. • Contemporaneously, Buyers entered into two agreements that were renewable annually: • A “flexible time” agreement, under which Buyers could swap their week in February for a week in the summer; and • A supplement to the “flexible time” agreement called the “4-share program,” under which: • the Buyers agreed not to occupy the unit during the summer week obtained by the swap; • the Developer was authorized to rent the unit during the summer week; with • the Buyers receiving the summer rental minus a 30% fee to the Developer. Donald J. Weidner

37. Wals v. Fox Hills Dev. Corp. (cont’d) • Buyers claimed: • that the side agreements constituted an “investment contract” within the definition of “security” • that the securities were not registered with the SEC • that therefore they were entitled to rescind the sale of an unregistered security. • Judge Posner said that the effect of the supplemental agreements was “to reduce the cost to them of their investment in their own unit.” • Reminiscent of Forman’s “rebate” language • “Nothing is more common than for the developer . . . to offer to rent out owned but temporarily unoccupied units as the agent of the owner.” Donald J. Weidner

38. Wals v. Fox Hills Dev. Corp. (cont’d) • Judge Posner recognized that some other circuits would hold this a security: “Because the resulting division of rental income makes the developer and the condominium owner coventurers in a profit-making activity, imparting to the condominium interest itself the character of an investment for profit . . . , those circuits that believe that only ‘vertical commonality’ is required to create an investment contract would deem the combination of sale and rental agreement in this case an investment contract.” Donald J. Weidner

39. Wals v. Fox Hills Dev. Corp. (cont’d) • “Other circuits, including our own, require more—require ‘horizontal commonality,’ thatis,a pooling of interests not only between the developer or promoter and each individual ‘investor’ but also among the ‘investors’ (the owners of the condominiums, in this case)—require, in short, a wheel and not just a hub and a spoke.” Donald J. Weidner

40. Wals v. Fox Hills Dev. Corp. (cont’d) • “The benefits [of a real estate “investment”] can be pecuniary or nonpecuniary, but the combination of the ‘flexible time’ agreement with the ‘4-share’ program converts the condominium owner’s investment, even if only temporarily, into a purely pecuniary investment, for the owner obtains no consumption value from his property when he is not occupying it.” • “Even so, the optional character of the ‘flexible time’ and ‘4-share’ agreements makes it difficult to conceive of the sale of the condominium itself as the sale of a security.” • However, the contracts were optional in Howey Donald J. Weidner

41. Wals v. Fox Hills Dev. Corp. (cont’d) • Here, the unit owner “receives the particular rental on that unitrather than an undivided share of the total rentals of all the units that are rented out. The nature of his interest thus is different from that of a shareholder in a corporation that owns rental property.” • The Buyers “did not receive an undivided share of some pool of rentals or profits. They received the rental on a single apartment, albeit one not owned by them (for it was not their week).” • “There was a pooling of weeks, in a sense, because the [Buyers] selected their summer swap week from a ‘pool’ of available weeks. But there was not a pooling of profits, which is essential to horizontal commonality.” Donald J. Weidner

42. Wals v. Fox Hills Dev. Corp. (end) • The requirement of uniform disclosure to investors “only makes sense if the investors are obtaining the same thing, namely an undivided share in the same pool of assets and profits.” • Or if the purchased interests are fungible? • “We can imagine a case . . . in which undeveloped lots are marketed on a large scale to unsophisticated investors who neither inspect their lot before buying it nor ever build or occupy a home on it—it is for them a purely speculative investment—and while there is no pooling of profits the investors regard the lots as fungible.” Donald J. Weidner

43. Time Sharing Mandatory Rental Pool Rental Agent Predetermined Developer Retains Management Control Optional Rental Pool Other Income Generation Emphasis on Profits Through Rents Emphasis on Appreciation of Particular Developer’s Projects Individuals purchase several units Part-time occupancy the rule Condominia As Securities—Relevant Structural and Circumstantial Factors: Most Suggestive Factors at Top Structural Circumstantial Donald J. Weidner

44. Long Notice to Occupy Especially during prime season Freedom to choose rental agent No rental agent Existing subdivision lot plus house to be built Lot Completed house on lot Purchasers live far from unit Year-round occupancy the rule Sales pitch based on place to live Structural and Circumstantial Factors (cont’d) Structural Circumstantial Donald J. Weidner

45. Registration Pressure Lifted • Stuart Saft, Structuring Condominium Hotels, New York Law Journal(March 11, 2013): • “[A] small change in the federal securities laws contained in the Jumpstart Our Business Startups Act (the JOBS Act) [2012] could be used to permit the nationwide sale of condominium units with . . . rental pools without the need . . . to register the offerings with the SEC. The JOBS Act permits sponsors to acknowledge that the units are securities, but by expanding an exemption under Regulation D, obviates the need to register with the SEC if all of the investors are accredited investors.” • 10b-5 still applies. • Blue Sky laws must also be checked. Donald J. Weidner

46. Marine Bank v. Weaver (1982)(Supplement p. 134) $ 2/28/78 Weavers (Sam & Alice) Marine Bank $50,000 CD 6 year CD FDIC insured up to $40,000 LESS THAN 3 WEEKS LATER Pledged the CD to guarantee Bank loan of $65,000 to Columbus Packing Co. Marine Bank 3/17/78 Weavers “In consideration for guaranteeing the loan”, Columbus’ owners agreed to give the Weavers: • 50% of Columbus’ net profits for the life of the guarantee; • $100 per month for the life of the guarantee; • right to use the Columbus barn and pasture at the discretion of the owners of Columbus Packing Co; and • right to veto future borrowing of Columbus Packing Co. In short, all but $3,800 of the $65,000 was used to satisfy prior bank claims (the bank kept $42,800 to itself) and the claims of other creditors. The Weavers say the bank solicited their guarantee and told them the $65,000 would be used as working capital. Columbus is belly up. Bank is poised to go for the Weavers’ CD. The Weavers cry “security.” Columbus Packing Co. A. Already owed Marine Bank $33,000 for prior loans; and B. Was substantially overdrawn on its checking account. Donald J. Weidner

47. Marine Bank (cont’d) • Justice Burger seemed to reject the most expansive reading of Howey. • Court’s starting point: The Act was adopted to restore investor confidence in the financial markets. • Court cites Howey but does not quote it or state its test. • Justice Burger’s “test” is “what character the instrument is given in commerce” by • the terms of the offer, • the plan of distribution, and • the economic inducements held out to the prospect. • He then admonishes against expanding the definition of security too far: “Congress, in enacting the securities laws, did not intend to provide a broad federal remedy for all fraud.” Donald J. Weidner

48. Marine Bank: the CD itself • Purchasers received a fixed rate of interest rather than dividends based on the bank’s profits. • Purchasers received no voting rights. • The CD differs from other long-term debt obligations because it “was issued by a federally regulated bank which is subject to the comprehensive set of regulations governing the banking industry.” • Therefor less risky? • There is a long history that nearly all depositors in failing banks receive full payment, even beyond the insured amount. Donald J. Weidner

49. Marine Bank: the CD itself (cont’d) • “It is unnecessary to subject issuers of bank certificates of deposit to liability under the antifraud provisions of the federal securities laws since the holders of bank certificates of deposit are abundantly protected under the federal banking laws.” • Note the interesting and fundamental jurisprudential point—it is “unnecessary” to interpret a statute a particular way because other law provides sufficient protection. Donald J. Weidner

50. Marine Bank: the loan guarantee • 3d Circuit had emphasized: Purchasers received a share of the slaughterhouse profits that would result from the efforts of its managers. • Reversing, the Supreme Court stated: Congressional intent was to cover [only] “those instruments ordinarily and commonly considered to be securities in the commercial world.” • “The unusual instruments found to constitute securities in prior cases involved offers to a number of potential investors, not a private transaction as in this case.” Donald J. Weidner