Securities and Exchange Commission v. W. J. Howey Co.

Howey (defendant) sold orange grove tracts to out-of-state, non-farmer buyers, 85% of whom also signed service agreements with an affiliated company that retained near-total control over cultivating and harvesting the groves, with buyers sharing in profits from the resulting orange sales; the SEC (plaintiff) sued for offering unregistered securities, and the lower courts agreed with Howey that the arrangement was not a security.