Practice question
A promoter says a scheme cannot be an investment contract because the business never earned or distributed the promised profits. All elements were present when investors joined. Explain the distinction between expected returns and realized business results.
Legal references
- RA8799 Securities Regulation Code: https://lawphil.net/statutes/repacts/ra2000/ra_8799_2000.html Sections3.1,9–10.
- Power Homes Unlimited v. SEC, GR164182, February26 2008 MAIN: https://lawphil.net/judjuris/juri2008/feb2008/gr_164182_2008.html MAIN flexible investment-contract test.
- SEC v. Prosperity.Com, GR164197, January25 2012 MAIN: https://lawphil.net/judjuris/juri2012/jan2012/gr_164197_2012.html MAIN test and role of persuasive foreign authorities.
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