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Frequently Asked Questions
 

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List of FAQs
 
 


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Investment Contracts

What Every Investor Should Know


An investment contract is a transaction whereby a person invests his or her money in a common business enterprise and is led to expect profits from the entrepreneurial or managerial efforts of the promoter or a third party.  To fall within the scope of the definition of a security, an investment contract must involve all of the above  elements.*

Almost any type of product can be included in an investment contract, which is considered to be an alternative investment.  Commission reminds investors to consider the risks associated with alternative investments, including entrepreneurial type of investment programs, which must either be registered with the Commission’s Securities Division or have qualified for an exemption from registration.

When considering alternative investment programs, investors should request proper written information such as a prospectus or offering materials before they invest. The documentation should contain enough clear and accurate information to allow investors or their advisers to evaluate and verify the particulars of the investment.


Even when investing with someone they know investors should verify the registrations of sellers and investment opportunities and investigate disciplinary histories by contacting the Investigator on Duty at the Arizona Corporation Commission’s Securities Division: 602.542.0662 or toll free in Arizona, 1.866.VERIFY-9 (837.4399), or via email at info@azinvestor.gov

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    *See SEC v. W.J. Howey Co., 328 U.S. 293 (1946) 

 The information provided on this website is not comprehensive, is not offered as legal advice, and is not a substitute for competent legal counsel.  The Securities Division provides this information to give you an overview of the topics discussed.   You should not rely on the accuracy of this information, but should carefully review all applicable statutes and regulations with the assistance of legal counsel.