In June, I wrote this post about U.S. District Court Judge Dana Sabraw’s opinion in Salameh v. Tarsadia Hotels, 2011 U.S. Dist. LEXIS 30375. The case involved the question of whether ownership interests in individual units of the Hard Rock Hotel San Diego constitute securities under either the investment contract test enunciated by the U.S. Supreme Court in S.E.C. v. Howey, 328 U.S. 293 (1946)) or the “risk capital” test described by the California Supreme Court in Silver Hills Country Club v. Sobieski, 55 Cal.2d 811 (1961).

Time and this case have crept on and now Judge Sabraw’s ruling is before the Ninth Circuit Court of Appeals. Recently, the Securities and Exchange Commission has weighed in with this amicus brief. Just like Captain Renault when he found gambling in Rick’s Cafe Americain, readers will be shocked to learn that the SEC takes the position that the an investment contract is implicated in this case.