Practice question
Compare two arrangements: in the first, purchasers pool money and depend primarily on a manager to generate their investment returns; in the second, buyers obtain a useful product and may earn referral compensation primarily through their own recruitment work. Explain why the investment-contract analysis may differ, with reference to Power Homes and SEC v. Prosperity.Com.
Legal references
- RA8799, Securities Regulation Code, Section3.1: https://lawphil.net/statutes/repacts/ra2000/ra_8799_2000.html
- Power Homes Unlimited v. SEC, GR164182, February26 2008, main decision: https://lawphil.net/judjuris/juri2008/feb2008/gr_164182_2008.html
- SEC v. Prosperity.Com, GR164197, January25 2012, main decision: https://lawphil.net/judjuris/juri2012/jan2012/gr_164197_2012.html
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