LER units are not securities because they fail the third and fourth Howey prongs: they carry no expectation of speculative profit and their accrual does not depend on the entrepreneurial efforts of others.
Source quote, verbatim
While LERs may satisfy the first two prongs, they fail to meet the critical third and fourth prongs, thus ensuring they are not securities under U.S. federal securities law
Wulf A. Kaal, Liquid Equity Rewards in Corporate America (2025). SSRN: https://ssrn.com/abstract=5583610
Holds when
vouchers remain non-transferable and untradeable
accrual is automated and the issuer's role stays ministerial
Classification
conditionsupport: arguedsecurities-law
Related claims
specializeskaal:claim:4021599-013 Under the Howey framework the U.S. Supreme Court supplies the investment contract analysis that determines whe...
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