Howey Tez vs The Securities and Exchange Commission?

Howey Tez vs The Securities and Exchange Commission? In 1946, there was a company called W.J. Howey Company which  owned citrus groves that were cultivated, harvested and marketed by its associated company, Howey-in-the-Hills Inc. The Howey Group planted about 200 hectares of crops per year and offered to sell half of the groves to the […]

3 min read

Howey Tez vs The Securities and Exchange Commission?
Darien Tan

Darien Tan

Howey Tez vs The Securities and Exchange Commission?

In 1946, there was a company called W.J. Howey Company which  owned citrus groves that were cultivated, harvested and marketed by its associated company, Howey-in-the-Hills Inc. The Howey Group planted about 200 hectares of crops per year and offered to sell half of the groves to the public to finance their future developments.  

Buyers of the groves were offered a land sales contract and an optional service contract in which Howey-in-the-Hills will continue to tend to the groves and sell the crops on behalf of the owners. As most buyers had no agricultural experience, over 80% of them took up the offer and solely relied on Howey-in-the-Hills to cultivate and market the crops. Under the service contract, Howey-in-the-Hills was given a lease with complete possession of the land and it shared the profits from the sale of the crops.

Howey failed to register the transactions and the Security & Exchange Commission (SEC) sued both Howey companies arguing that the service contracts were unregistered and not exempt securities under the Securities Act of 1933. While the Howey companies won their cases at both the District Court and Court of Appeals, the United States Supreme Court finally ruled that the leaseback arrangements qualified as investment contracts.  

In doing so, the SEC established four criteria called the Howey Test to determine whether a certain transaction can be deemed as an investment contract. These are:

– Is there an investment of money?

– Is the investment into a common enterprise where the fortunes of the purchasers and/or 

  promoters are aligned?  

– Is there an expectation of profit on the part of the purchaser?

– Are the profits solely derived from the efforts of the promoter or third party?

Our protagonist Howey Tez is leading the way to educate the public about the differences between security tokens, utility tokens and NFTs. Howey Tez Pte Ltd has the rights to produce derivative digital and non-digital products based on Bored Ape #2371. The IXAPE token presents the best of both utility tokens and security tokens such that the token holders get the maximum benefit. And unlike the Howey companies of old, with Howey Tez Pte Ltd, we are establishing a clear relationship with IXAPE Token holders who signed up and subscribed for the Token. 

And what can we do with our Bored Ape #2371? In the BAYC community, we have seen derivative works ranging from coffee subscriptions through NFTs (about $1 million in trading volumes) by Bored Breakfast Club (https://www.boredbreakfastclub.com) and talented DJs APE-branding (there, a new word) themselves and inking deals with global entertainment groups (https://www.escapeplanbayc.com) to Adidas’ Into the Metaverse limited edition NFT collaboration that has seen over USD100 million in trading volumes (https://www.adidas.com/into_the_metaverse/). So, what we are getting at is that the possibilities are as boundless as our imagination can take us. 

What would you suggest we do with Howey Tez? 

Similar

STO 2021 Recap  + 2022 Predictions
blog

08 February 2022

STO 2021 Recap + 2022 Predictions

12 min read

What is your Digital Strategy?
blog

19 January 2022

What is your Digital Strategy?

2 min read

Featured Issuer – DTGO Corporation
blog

19 January 2022

Featured Issuer – DTGO Corporation

3 min read

Interested in working with us?

Get In TouchLearn More

Stay updated

Our newsletter is offered with a spam free guarantee

 

InvestaX®

Digital Securities are digital representations of traditional securities and financial interests, such as a contract of equity or debt in real estate and private equity. DSOs open up a new world of financial instruments and investment structures. They are supported using distributed ledger technology and smart contracts.

Explore

IBF CourseDealsIssuersDisclosurePrivacy PolicyTerms of Use

Important Notice: “InvestaX.io is operated by IC SG Pte. Ltd. (“InvestaX” or “IC SG”), a Singapore private limited company (Company Registration No. 201300459N). ICSG Pte. Ltd. (the “Company”) holds a Capital Markets Services license No. CMS100635-1 (“CMSL”) to deal in securities by the Monetary Authority of Singapore (“MAS”), which allows the Company to facilitate the primary offer and issuance of securities and act as an intermediary between issuers and investors. The Company also holds a regulatory exemption under the Financial Advisers Act (Cap. 110) which allows it to provide advice on units in collective investment schemes (broadly, pooled investments). By visiting this site, you agree to be bound by InvestaX’s Terms of Use and Privacy Policy. InvestaX.io is intended for accredited investors and otherwise qualified investors who understand and accept the risks associated with private investments. Investments are not bank deposits and are not guaranteed.

InvestaX does not give investment advice, nor does it make any recommendations regarding the appropriateness of any particular opportunities for any investor offered on its site.
No correspondence or information provided on InvestaX.io or by any representative of InvestaX should be construed as a recommendation of any security, or agreement to apply for or buy any securitites, to effect or conclude any transaction of any kind whatsoever in any jurisdiction to any person to whom it is unlawful to make such an offer. Each investor is advised to conduct his/her own due diligence as InvestaX does not provide any investment advice, business advice, or tax or legal advice. Please read InvestaX’s Terms of Use for more detailed terms and conditions to which users of InvestaX are subject.

In compliance with MAS license issuance conditions, the platform must disclose the marital status of the founders. Please note that the co-founder, Julian Kwan, and co-founder, Shi Alice Chen, are married.