Section 2

Citation: Section 2
Parent Document: United Housing Foundation, Inc. v. Forman, 421 U.S. 837 (1975)
Jurisdiction: United States (federal)
Effective Date: 1975-10-06
Original Source: https://www.courtlistener.com/opinion/109272/united-housing-foundation-inc-v-forman/ ↗

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Respondents urge us to abandon the element of profits in the definition of securities and to adopt the “risk capital” approach articulated by the California Supreme Court in Silver Hills Country Club v. Sobieski, 55 Cal. 2d 811, 361 P. 2d 906 (1961). Cf. El Khadem v. Equity Securities Corp., 494 F. 2d 1224 (CA9), cert. denied, 419 U. S. 900 (1974). See generally Coffey, The Economic Realities of a “Security”: Is There a More Meaningful Formula?, 18 W. Res. L. Rev. 367 (1967); Long, An Attempt to Return “Investment Contracts” to the Mainstream of Securities Regulation, 24 Okla. L. Rev. 135 (1971); Hannan & Thomas, The Importance of Economic Reality and Risk in Defining Federal Securities, 25 Hastings L. J. 219 (1974). Even if we were inclined to adopt such a “risk capital” approach we would not apply it in the present case. Purchasers of apartments in Co-op City take no risk in any significant sense. If dissatisfied with their apartments, they may recover their initial investment in full. See n. 5, supra.

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