Koscot Interplanetary Inc. v. King

Are MLM distributorships securities under Texas state law?

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The Texas Court of Civil Appeals held that the Koscot Distributorships were not securities under state law. The court specifically declined to follow other states in interpreting Koscot distributorships as securities. The court felt that because potentially significant efforts on the part of the distributors was required to maintain a downline, the profits could not be expected to come solely from the efforts of others, a requirement of a security under Texas Law.

The case and case summary are also available at: http://www.mlmlegal.com/legal-cases/KoscotInterplanetaryInc_v_King.php

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Published In: MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates, Securities Updates

Reference Info:State, 5th Circuit, Texas | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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