Howey test

proper noun

A test to determine whether an instrument qualifies as an "investment contract" for the purposes of the Securities Act of 1933: it must be "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party".

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Meanings

proper nounthe Howey test
  1. lawA test to determine whether an instrument qualifies as an "investment contract" for the purposes of the Securities Act of 1933: it must be "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party".

Origin

Established as a result of the US legal case SEC v. W. J. Howey Co. (1946).

Full word history & related roots →
Cite this entry
APA

Howey test. (n.d.). In WatkinsX Dictionary. Retrieved November 2, 2026, from https://dictionary.watkinsx.com/word/Howey%20test

MLA

“Howey test.” WatkinsX Dictionary, https://dictionary.watkinsx.com/word/Howey%20test. Accessed November 2, 2026.

Chicago

WatkinsX Dictionary, s.v. “Howey test,” accessed November 2, 2026, https://dictionary.watkinsx.com/word/Howey%20test.

Source: Howey test on Wiktionary, CC BY-SA 4.0.