SEC v. SG Ltd.
United States Court of Appeals for the First Circuit
265 F.3d 42 (2001)
Relevant factsFree
SG's (defendant) website game let users buy and sell stock in virtual companies, pooling all users' funds into one account, guaranteeing at least a 10% return, promising payment on demand, and paying referral bonuses funded by new investor buy-ins; the SEC (plaintiff) sued, alleging the game constituted unregistered investment contracts, and the district court dismissed the claim.
IssueFree
Whether pooling assets from multiple investors so that all share in the enterprise's profits and risks constitutes a common enterprise under the Howey test.