Howey test

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English

Etymology

Established as a result of the US legal case SEC v. W. J. Howey Co. (1946).

Proper noun

the Howey test

  1. (law) A test to determine whether an instrument qualifies as an "investment contract" for the purposes of the Securities Act of 1933: it must be "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party".