In a recent article on the inVigor Law Group blog, Kyle Hulten wrote about the definition of a security. “Security” is not just a fancy name for stock in a company. A security can be a variety of different things, including equity, debt, and other investment instruments. The definitions vary from state to state and the federal definition is far from clear. Because there isn’t a clear one size fits all definition of “security,” it makes issuing securities (or issuing something you may not believe is a security) a risky endeavor.
It’s important to learn what a security is because there are serious consequences for failing to comply with state and federal securities regulations. Just ask Bernie Madoff. If you’re ever looking to take money from others to use in your business, you should be sure you understand your obligations under the relevant state and federal laws. Otherwise, you risk taking on substantial liability for yourself and your business.
You can read the full article here. Trust me, it’s worth the read.
If you've enjoyed reading this post, please share: