Because the pension plan did not correspond directly to the employee’s time worked, so the contributions could not be earmarked as on behalf of any specific employee. There are other regulatory schemes dealing with pensions: ERISA. Congressional intent: Congress passed ERISA it thought there was a regulatory void. (another applicable regulatory regime: FDIC) No practical need for securities laws to cover pensions. Note this argument is a safety valve and applied only narrowly to other federal regulatory regimes. (must be another federal regime) Notes: How to determine whether transactions are sufficiently close to the capital market? amount and type of consideration decision-making process of the parties What are the alternatives? other regulatory schemes. Decision of judge or investors, rarely applied Common Enterprise SCOTUS hasn’t defined common enterprise. Circuit split— horizontal commonality – return to a group of investors are pooled and are correlated with one another The pooling of funds among multiple investors and an apportionment of profits from the enterprise to investors based on their pro rata investment in the pool. all tied together; spokes on a wheel with everyone connected by rim with correlated returns vertical commonality – promoter’s efforts impact the individual investors collectively Investors do not necessarily receive the same return relative to their investment. wheel with no rim, just hub broad – promoter or manager does not share returns, and also not at risk narrow – promoter or manager does share return, and also take the risk SEC v. SG Ltd, 265 F.3d 42 (1st Cir. 2001) Facts: SG created virtual stock market (StockGeneration) with a “privileged company” shares of which are guaranteed to return 10%/month (215%/annually). SG claims they can maintain return
Because the pension plan did not correspond directly to the employee’s time worked, so the contributions could not be earmarked as on behalf of any specific employee. There are other regulatory schemes dealing with pensions: ERISA. Congressional intent: Congress passed ERISA it thought there was a regulatory void. (another applicable regulatory regime: FDIC) No practical need for securities laws to cover pensions. Note this argument is a safety valve and applied only narrowly to other federal regulatory regimes. (must be another federal regime) Notes: How to determine whether transactions are sufficiently close to the capital market? amount and type of consideration decision-making process of the parties What are the alternatives? other regulatory schemes. Decision of judge or investors, rarely applied Common Enterprise SCOTUS hasn’t defined common enterprise. Circuit split— horizontal commonality – return to a group of investors are pooled and are correlated with one another The pooling of funds among multiple investors and an apportionment of profits from the enterprise to investors based on their pro rata investment in the pool. all tied together; spokes on a wheel with everyone connected by rim with correlated returns vertical commonality – promoter’s efforts impact the individual investors collectively Investors do not necessarily receive the same return relative to their investment. wheel with no rim, just hub broad – promoter or manager does not share returns, and also not at risk narrow – promoter or manager does share return, and also take the risk SEC v. SG Ltd, 265 F.3d 42 (1st Cir. 2001) Facts: SG created virtual stock market (StockGeneration) with a “privileged company” shares of which are guaranteed to return 10%/month (215%/annually). SG claims they can maintain return
SurveyofSecurities_Choi_2016.docx