The Farmer’s Cooperative of Arkansas and Oklahoma (Co Op) was an agricultural cooperative that had approximately 23,000 members. To raise money to support its general business operations, Co Op sold promissory notes to investors that were payable on demand. Co Op offered the notes to both members and nonmembers, advertised the notes as an “investment program,” and offered an interest rate higher than that available on savings accounts at financial institutions. More than 1,600 people purchased the notes, worth a total of $ 10 million. Subsequently, Co Op filed for bankruptcy. A class of holders of the notes filed suit against Ernst & Young, a national firm of certified public accountants that had audited Co Op’s financial statements, alleging that Ernst & Young had violated Section 10(b) of the Securities Exchange Act of 1934. Are the notes issued by Co Op securities? Reeves v. Ernst & Young, 494 U. S. 56, 110 S. Ct. 945, 1990 U. S. Lexis 1051 (Supreme Court of the United States)

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