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Abstract

Almost half a century has passed since Congress promulgated the Securities Act of 1933 and the Securities Exchange Act of 1934, which were designed to curb abuses within those financial environments utilizing a "security." During that time, the ostensible anti-fraud workhorse of the the two acts has been section 10(b) of the 1934 Act and rule 10b-5. Application of these provisions provides a federal forum as well as a private cause of action, which in turn has provided a fertile opportunity for prospective plaintiffs to attempt an application of the securities laws to their specific dilemma. One of the most frequently alleged bases for federal subject matter jurisdiction under the securities laws is the presence of a "note" transaction. In Marine Bank v. Weaver, the United States Supreme Court confronted the issue of whether a certificate of deposit issued by a federally regulated bank was to be deemed a "security" for purposes of the federal securities law and anti-fraud provisions. The Weaver decision provided a conditional answer to an issue that has been the subject of judicial dialogue for some time, holding that the certificate of deposit in the present case was not a security. More importantly, however, Weaver develops and redefines the Court's previous fundamental analysis as to what is, and what is not, a security. The purpose of this Note is to demonstrate (1) the impact of the Court's decision on prior judicial interpretations as to what constitutes a security; (2) refinements to the Court's own basic test; and (3) the creation of new ambiguities concerning the proper reach of the federal securities laws.

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