What Are the Four Prongs of the Howey Test?

The Howey Test establishes four criteria that must all be met for a transaction to be considered an investment contract and, thus, a security under US law. The four prongs are: 1.

An investment of money; 2. In a common enterprise; 3.

With the expectation of profits; 4. To be derived solely from the efforts of others.

In modern interpretations, "solely" has been broadened to "predominantly" or "substantially" from the efforts of others.