Securities
Tradeable financial instruments that represent ownership, a creditor relationship, or rights to ownership, including stocks, bonds, and derivatives.
What is Securities?
Securities are fungible, tradeable financial instruments that represent ownership interests (equities), debt obligations (bonds), or contractual rights (derivatives and warrants). Under US federal securities law — primarily the Securities Act of 1933 and the Securities Exchange Act of 1934 — a security is broadly defined by the Howey Test as an investment of money in a common enterprise with an expectation of profits from the efforts of others. The SEC regulates securities markets and requires public issuers to disclose material financial information. Securities are classified broadly into equity securities (stocks), debt securities (bonds, notes), hybrid securities (convertible bonds, preferred stock), and derivative securities (options, futures). The term 'security' also determines regulatory treatment — if an instrument qualifies, it must be registered or fall under an exemption.
Example
When the SEC brought enforcement actions against several cryptocurrency platforms in 2023, the central legal question was whether the tokens sold constituted securities under the Howey Test. The SEC argued that many crypto tokens were investment contracts — and therefore securities — because investors provided capital expecting profits driven by the issuer's efforts, triggering registration and disclosure requirements that the platforms had not followed.
Source: SEC — What We Do