Question

Discuss whether the ownership interests of each of the following organziations would be subject to federal...

Discuss whether the ownership interests of each of the following organziations would be subject to federal securities law upon their issuance.
1. sole proprietorship intrests
2. general partnership interests
3. limited partnership interests
4.subchapter s corporation interests
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Answer #1

The test which classifies an investment as securities or not is done on the basis of whether investors have certain decision making powers in the running of the affairs of the organization. If they have definite powers, then it is not securities and else if investment is done by passive investors, then the investments are securities.
Based on the same, the classification ensures the following:
1. sole proprietorship interests - Do not classify as securities
2. general partnership interests - Do not classify as securities
3. limited partnership interests - Classified as securities
4.subchapter s corporation interests - Classified as securities

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