Thursday, December 12, 2019

Conceptual Securities Art

Brian Frye has released a new paper including an SEC No-Action Letter request.  His abstract describes the piece:

This article is a work of conceptual art in the form of a law review article. It argues that the sale of conceptual art violates the Securities Act of 1933. And it proposes to prove itself by requesting an SEC no-action letter holding that the sale of a work of conceptual art titled "SEC No-Action Letter Request" does not violate the securities laws.

Essentially, Frye argues that conceptual artwork meets the Howey test's four elements:

  1. The investment of money
  2. In a common enterprise
  3. With the expectation of profits
  4. From the efforts of others.   

It'll be interesting to see if the SEC responds to Frye's request.  Frye has also agreed to issue "ownership certificates" to the first 50 persons to email him with a request for a certified copy of the work.  As this conceptual art enterprise has not been nested within any limited liability business entity, I wonder whether the owners of certified copies of the work become anything like general partners in the enterprise under common law.  I'm not sure that a court would view this conceptual art piece as a business.

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