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> if it is marketed, bought, sold, and held as a money-making thing, it's a security No, sorry, no such legal language exists and how absurd of a law would tha

> if it is marketed, bought, sold, and held as a money-making thing, it's a security No, sorry, no such legal language exists and how absurd of a law would that be. Anything which goes up and down in value could be bought or sold as "a money making thing" including collectible video games, books, Pokemon cards, .com domain names, pork bellies, houses, bar codes, imported goods, rare sneakers, wholesale products, golf club memberships, Picasso paintings, etc. There is a Supreme Court precedent called the Howey test which specifies 4 criteria for which all 4 must be true in order for something to be a security. You cannot have 3 of 4 and be considered to be a security: 1. An investment of money 2. In a common enterprise 3. With the expectation of profit 4. To be derived from the efforts of others Notably, speculative flipping of owned assets is not considered to profit derived from a common enterprise. Speculative flipping happens everywhere in all supply chains you participate in on a daily basis. Everyone is attempting to buy low in an attempt to sell high. Everyone loves to compare crypto to the tulip mania in the Netherlands from the 17th century. While that is true in some cases, you certainly can't make the case that tulips should be regulated by the SEC.

ajross 3y ago
That seems to reinforce the grandparents characterization of this as an evasion of the Howey test, not refute it. You really think the technical distinction of a unique number defeats the idea of "common enterprise"? Doesn't the fact that all the initial profit goes to one enterprise clearly make it "common"? Conversely, aren't traded shares of common stocks on NYSE merely "speculative flipping" unless they're specifically paying dividends? Meh. I mean, fine, you can make that argument but I don't think this is nearly as clear as you think it is. From my perspective: I mean, duh. Of course these are securities. "Give us money for this thing and you'll get more money later" isn't a hard idea to understand as the spirit behind securities regulation.
- Dylan16807 3y ago
  > Doesn't the fact that all the initial profit goes to one enterprise clearly make it "common"? Maybe, but you're not tied to the enterprise after the initial purchase. > Conversely, aren't traded shares of common stocks on NYSE merely "speculative flipping" unless they're specifically paying dividends? The value is tied to the company and can be extracted in a multitude of ways, and the company has a duty to the shareholders. The expectation of profit in a stock goes well beyond just dividends. > I mean, duh. Of course these are securities. "Give us money for this thing and you'll get more money later" That depends on where the money comes from. The people selling gold say the exact same thing, and gold is not a security.
  - ajross 3y ago
    There absolutely are gold-based securities, though, and most of the "invest in gold" scams are likely subject to securities law. It's true that gold objects themselves haven't been traditionally considered securities, but that's not a blanket statement. Which is to say, again, that it's complicated and there aren't any free hacks to evade regulation if you're trying to scam people with an obviously fraudulent security
smachiz 3y ago
They were tryiny to thread a needle between a security and a commodity that acts like either, but is regulated like neither. Which is a great indicator it's a scam.
- Dylan16807 3y ago
  What commodity regulation are they trying to avoid?
EGreg 3y ago
Actually, Pokemon cards fit all four prongs of Howey as does Yu Gi Oh etc. SEC would have a slam dunk against these sales (to children, no less!) but they just chose never to pursue that. 1. They buy the cards 2. The Pokemon show and franchise 3. They keep them in MINT CONDITION and don’t open them 4. If the show fails to entice more kids in the future then everyone will forget about that special charazard card, so it all depends on the show and movies to keep the pokemon franchise kickin So really, all the holier-than-thou types should realize how many of the counterexamples who never got sued are just SEC exercising their discretion https://gamerant.com/pokemon-rare-charizard-card-value/ https://gamerant.com/pokemon-rare-charizard-card-value/
- ameister14 3y ago
  The purchase of the cards is not engaging in a common enterprise with the Pokemon show and the efforts of others aren't the cause of the rise in prices.
  - EGreg 3y ago
    If not for the show, the cards wouldn’t be worth as much. The show is what is spreading the memes and driving the demand for show related merchandise. That IS the business model! It sounds like your whole defense would hinge on hoping the SEC won’t be able to convince a court that it’s a common enterprise. I looked it up and “common enterprise” is not very well defined in either statutory law nor case law. I have been over this with many people and made them realize that you can’t possibly predict “this isn’t a common enterprise” defense would work in a court or law. SEC has argued many novel concepts, just this year with LBRY for instance. And they were successful. If they want to say it was a common enterprise, and the term is not even well defined, then they will make a strong case. It’s not up to you reading your own opinions into definitions, it’s whether a judge or jury makes a decision in a case, and / or whether the SEC exercises their restraint.
    - joshuamorton 3y ago
      > The show is what is spreading the memes and driving the demand for show related merchandise. That IS the business model! I'm actually not sure how true this is. Given that there are non-pokemon examples (like magic: the gathering) that don't have cross-branding, and there exists a competitive pokemon TCG scene independent of the show, and the cards maintain a secondary market value as long as people want to play kitchen-table or collect them as collectibles, which will be true independent of the success of the Pokemon company, the common enterprise thing falls apart. I don't purchase pokemon cards as an investment in The Pokemon Company^tm with the expectation of profit. I purchase them as a toy to entertain me. That fails prong two and three. That a secondary market exists, and that particular objects have a high secondary-market value doesn't make the whole thing a common enterprise for profit, and I really doubt the majority of pokemon card purchasers do so with the intent to profit, same with MTG. Most people want some cool cards and entertainment, and throw them away. (And this is backed up by data: with MTG, which has astronomically higher demand and card prices than pokemon, their market research shows that, by far, their largest consumer segment is entirely casual players who never attend sanctioned events. They buy packs or precons. So concepts like the secondary market value are immaterial for the majority of the consumers)

ajross 3y ago

That seems to reinforce the grandparents characterization of this as an evasion of the Howey test, not refute it. You really think the technical distinction of a unique number defeats the idea of "common enterprise"? Doesn't the fact that all the initial profit goes to one enterprise clearly make it "common"? Conversely, aren't traded shares of common stocks on NYSE merely "speculative flipping" unless they're specifically paying dividends? Meh. I mean, fine, you can make that argument but I don't think this is nearly as clear as you think it is. From my perspective: I mean, duh. Of course these are securities. "Give us money for this thing and you'll get more money later" isn't a hard idea to understand as the spirit behind securities regulation.

Dylan16807 3y ago
> Doesn't the fact that all the initial profit goes to one enterprise clearly make it "common"? Maybe, but you're not tied to the enterprise after the initial purchase. > Conversely, aren't traded shares of common stocks on NYSE merely "speculative flipping" unless they're specifically paying dividends? The value is tied to the company and can be extracted in a multitude of ways, and the company has a duty to the shareholders. The expectation of profit in a stock goes well beyond just dividends. > I mean, duh. Of course these are securities. "Give us money for this thing and you'll get more money later" That depends on where the money comes from. The people selling gold say the exact same thing, and gold is not a security.
- ajross 3y ago
  There absolutely are gold-based securities, though, and most of the "invest in gold" scams are likely subject to securities law. It's true that gold objects themselves haven't been traditionally considered securities, but that's not a blanket statement. Which is to say, again, that it's complicated and there aren't any free hacks to evade regulation if you're trying to scam people with an obviously fraudulent security

smachiz 3y ago

They were tryiny to thread a needle between a security and a commodity that acts like either, but is regulated like neither. Which is a great indicator it's a scam.

Dylan16807 3y ago
What commodity regulation are they trying to avoid?

EGreg 3y ago

Actually, Pokemon cards fit all four prongs of Howey as does Yu Gi Oh etc. SEC would have a slam dunk against these sales (to children, no less!) but they just chose never to pursue that. 1. They buy the cards 2. The Pokemon show and franchise 3. They keep them in MINT CONDITION and don’t open them 4. If the show fails to entice more kids in the future then everyone will forget about that special charazard card, so it all depends on the show and movies to keep the pokemon franchise kickin So really, all the holier-than-thou types should realize how many of the counterexamples who never got sued are just SEC exercising their discretion https://gamerant.com/pokemon-rare-charizard-card-value/ https://gamerant.com/pokemon-rare-charizard-card-value/

ameister14 3y ago
The purchase of the cards is not engaging in a common enterprise with the Pokemon show and the efforts of others aren't the cause of the rise in prices.
- EGreg 3y ago
  If not for the show, the cards wouldn’t be worth as much. The show is what is spreading the memes and driving the demand for show related merchandise. That IS the business model! It sounds like your whole defense would hinge on hoping the SEC won’t be able to convince a court that it’s a common enterprise. I looked it up and “common enterprise” is not very well defined in either statutory law nor case law. I have been over this with many people and made them realize that you can’t possibly predict “this isn’t a common enterprise” defense would work in a court or law. SEC has argued many novel concepts, just this year with LBRY for instance. And they were successful. If they want to say it was a common enterprise, and the term is not even well defined, then they will make a strong case. It’s not up to you reading your own opinions into definitions, it’s whether a judge or jury makes a decision in a case, and / or whether the SEC exercises their restraint.
  - joshuamorton 3y ago
    > The show is what is spreading the memes and driving the demand for show related merchandise. That IS the business model! I'm actually not sure how true this is. Given that there are non-pokemon examples (like magic: the gathering) that don't have cross-branding, and there exists a competitive pokemon TCG scene independent of the show, and the cards maintain a secondary market value as long as people want to play kitchen-table or collect them as collectibles, which will be true independent of the success of the Pokemon company, the common enterprise thing falls apart. I don't purchase pokemon cards as an investment in The Pokemon Company^tm with the expectation of profit. I purchase them as a toy to entertain me. That fails prong two and three. That a secondary market exists, and that particular objects have a high secondary-market value doesn't make the whole thing a common enterprise for profit, and I really doubt the majority of pokemon card purchasers do so with the intent to profit, same with MTG. Most people want some cool cards and entertainment, and throw them away. (And this is backed up by data: with MTG, which has astronomically higher demand and card prices than pokemon, their market research shows that, by far, their largest consumer segment is entirely casual players who never attend sanctioned events. They buy packs or precons. So concepts like the secondary market value are immaterial for the majority of the consumers)