Mutual Benefits Corporation (MBC) (defendant) was a viatical settlement provider. MBC purchased life insurance policies from terminally ill individuals, continued to make the premium payments, and sold interests in those policies to investors. In order for MBC and its investors to profit off a policy, the policyholder had to die before his or her expected death date. MBC was supposed to estimate each policyholder’s expected death date prior to signing the settlement, but in practice often made life expectancy evaluations after closing settlements. MBC did not register the sales with the Securities and Exchange Commission (SEC) (plaintiff). The SEC brought an enforcement action, claiming that the interests were investment contracts and MBC’s failure to file a registration statement violated securities laws. The district court found that MBC’s settlement contracts were investment contracts. MBC appealed, claiming that the contracts were not dependent on any post-purchase efforts by MBC so they could not be investment contracts. It argued that the contracts only involved MBC’s efforts prior to purchase, and that thereafter each contract was dependent only on the death date of the policyholder.