In this lesson, we’ll learn about doctrinal tests for determining whether an instrument or investment is a security.

I. The Howey Test

Whether an instrument is or is not a security can’t be determined merely by checking to see if it’s labeled with one of the names listed in the Securities Act or Exchange Act. Otherwise, by calling an instrument a convenient name, promoters could evade regulation of transactions that Congress intended to regulate. 

Instead, courts follow a functional...