## Facts

- The SEC sued Glenn W. Turner Enterprises, Inc., its subsidiary Dare To Be Great, Inc., and related insiders over the marketing and sale of “self-improvement” programs.
- Dare sold multiple offerings, including Adventures I–IV and a “$1,000 Plan,” which combined motivational materials and seminars with an income opportunity tied to recruiting new purchasers.
- Purchasers of Adventures III and IV and the $1,000 Plan, after meeting minimal conditions, could become “independent sales trainees” authorized to sell the programs and receive a share of purchase proceeds.
- The compensation structure depended on bringing in additional participants, making recruitment the primary economic feature of the offerings rather than the training content.
- The SEC alleged Adventures III and IV and the $1,000 Plan were unregistered “investment contracts” sold through fraudulent practices.
- The district court found the scheme to be a large-scale fraud and issued a preliminary injunction barring further offers and sales of the challenged plans and restricting non-ordinary-course withdrawals of corporate funds.
- Defendants appealed, arguing the plans were not securities because participants had to exert effort to earn returns.

## Issues

1. Whether Adventures III and IV and the $1,000 Plan were “investment contracts,” and thus “securities,” even though participants’ profits depended partly on their own selling and recruiting efforts.
2. Whether the district court properly granted a preliminary injunction enjoining the offerings and restricting certain corporate asset withdrawals pending further proceedings.

## Decision

- The Ninth Circuit affirmed the preliminary injunction.
- The court held Adventures III and IV and the $1,000 Plan were “investment contracts” within the federal securities laws.
- The court rejected a literal reading of *Howey* that would require profits to come “solely” from the efforts of others.
- The court concluded that, in economic reality, participants expected profits primarily from the promoter-controlled system and the promoter’s organizational and managerial efforts, with participant actions being ancillary to a prearranged scheme.

## Legal Principles

- The “solely from the efforts of others” language in the investment-contract test is not applied rigidly; the analysis turns on substance and economic reality.
- A scheme may be an investment contract when the promoter’s efforts are the essential managerial or entrepreneurial ones that determine success or failure, even if investors perform some tasks.
- Securities laws are construed broadly to protect investors and to prevent promoters from avoiding regulation by assigning nominal or scripted duties to participants.
- Pyramid-like recruitment programs that induce participants to pay money for the chance to profit through a promoter-devised structure can constitute investment contracts subject to registration and antifraud provisions.

## Conclusion

The Ninth Circuit treated the challenged “Dare To Be Great” offerings as securities because participants were induced to invest in a promoter-controlled, recruitment-driven program where the decisive managerial efforts were supplied by others, and it upheld preliminary injunctive relief to halt unregistered offerings and protect assets during the case.


Securities & Exchange Comm'n v. Glenn W. Turner Enters., Inc., 474 F.2d 476 (9th Cir. 1973)