Waters v. Millsap (Majority, with Dissenting)Annotate this Case
The Arkansas Securities Commissioner filed a civil regulatory action against three individuals (collectively, Appellees), alleging that Appellees engaged in the sale of unregistered securities - in the form of notes for real estate loans with a fixed rate of interest - and offering and selling securities despite not being licensed as brokers or agents in violation of the Arkansas Securities Act. The circuit court granted summary judgment in favor of Appellees, concluding that the notes at issue were not securities based on the test announced by the Arkansas Court of Appeals in Smith v. State. The Supreme Court reversed, holding that while the Smith test is instructive, the all-inclusive nature of the test set forth by the Supreme Court in Schultz v. Rector-Phillips-Morse, Inc. is better suited to the purposes of the Act. Remanded.