SEC v. Edwards, 540 U.S. 389, 8 (2004)

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Opinion of the Court

housing cooperative shares, regarding which the purchaser "is motivated by a desire to use or consume the item purchased." Id., at 852-853 (quoting Howey, supra, at 300). Thus, Forman supports the commonsense understanding of "profits" in the Howey test as simply "financial returns on . . . investments." 421 U. S., at 853.

Concededly, Forman's illustrative description of prior decisions on "profits" appears to have been mistaken for an exclusive list in a case considering the scope of a different term in the definition of a security, "note." See Reves, 494 U. S., at 68, n. 4. But that was a misreading of Forman, and we will not bind ourselves unnecessarily to passing dictum that would frustrate Congress' intent to regulate all of the "countless and variable schemes devised by those who seek the use of the money of others on the promise of profits." Howey, supra, at 299.

Given that respondent's position is supported neither by the purposes of the securities laws nor by our precedents, it is no surprise that the SEC has consistently taken the opposite position, and maintained that a promise of a fixed return does not preclude a scheme from being an investment contract. It has done so in formal adjudications, e. g., In re Abbett,Sommer&Co., 44 S. E. C. 104 (1969) (holding that mortgage notes, sold with a package of management services and a promise to repurchase the notes in the event of default, were investment contracts); see also In re Union Home Loans (Dec. 16, 1982), 26 S. E. C. Docket 1517, 1519 (report and order regarding settlement, stating that sale of promissory notes secured by deeds of trust, coupled with management services and providing investors "a specified percentage return on their investment," were investment contracts), and in enforcement actions, e. g., SEC v. Universal Service Assn., 106 F. 2d 232, 234, 237 (CA7 1939) (accepting SEC's position that an investment scheme promising "assured profit of 30% per annum with no chance of risk or loss to the contributor" was a security because it satisfied the pertinent

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