Investment contracts might not be securities

In a counterpoint to last month’s decision in SEC v. Sethi, the Fifth Circuit reversed a summary judgment about whether oil-and-gas investment contracts qualified as “securities” for purposes of 10(b)(5) and 15(a) liability: “Fifteen investors also submitted affidavits declaring that they had the power to, and did in fact, vote on a variety of decisions. And the record does not show that Arcturus or Aschere took any significant actions without the investors’ prior approval. The fact that the investors voted and took actions to manage the drilling projects makes this case different than others where the district court appropriately granted summary judgment.” SEC v. Arcturus Corp., No. 17-10503 (Jan. 7, 2019).