ETS Payphones, Inc. sold pay phones to the public. The company then leased back the pay phones from the purchaser, promising a guaranteed 14 percent annual return on their investment. Although ETS’s marketing materials trumpeted the “incomparable pay phone” as “an exciting business opportunity,” the pay phones did not generate enough revenue for ETS to make the required payments. The SEC sued, alleging that ETS had been selling unregistered securities. Were the pay phone contracts securities under the 1933 Act? These allegedly “guaranteed” investments are particularly attractive to older and less sophisticated investors. Was it ethical to pitch a high risk investment to vulnerable investors who were unable to assess the risks accurately?