Why The SEC v. Ripple Decision By Judge Torres May Be Overturned

Part I - What good is the Howey Test if it doesn’t work for stocks?

Our programming this month took an unexpected turn, deviating slightly from our initial expectations. The reason behind this shift lies in Judge Torres’ much-awaited opinion in SEC v. Ripple. Throughout June, we extensively discussed Howey, and with the issued opinion, we will undoubtedly delve into its intricate details. 

Today we aim to embark on a thought-provoking experiment and present arguments pointing to a potential reversal. Our experiment involves removing stocks from the definition of “security”, leaving only the term “investment contract,” and accordingly the Howey test to determine their characterization. In other words, how would the Howey test fare if it were to be applied to stocks?

Now, let's delve into the details of this intriguing exploration.