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Series 63: Regulation of Securities & Issuers
Series 63 practice questionmediumSecurities vs. non-securities: collectibles

A group of investors pools money to purchase rare whiskey casks, expecting to profit when the casks are sold by a professional curator. Under the Uniform Securities Act, this arrangement is MOST likely classified as:

  1. AA security, because of the expectation of profits from others’ efforts✓ Correct answer
  2. BNot a security, because whiskey casks are tangible property
  3. CA security only if the casks are insured
  4. DNot a security, as it is not traded on an exchange
Explanation

Why AA security, because of the expectation of profits from others’ efforts

Pooled investments with profits derived from others (the curator) meet the investment contract test, regardless of the asset's tangibility. Insurance and exchange listing are irrelevant. See USA Sec. 401(13); Howey test.

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