By Rikard Lundberg, Thomas Krysa and Trayton Oakes (October 5, 2018, 1:01 PM EDT) -- Almost all business ventures involve someone investing money for the purpose of earning a profit. In many cases, multiple investors pool their money into an entity or into the hands of a smaller group of individuals who are tasked with turning a profit. In these circumstances, it is important to ask whether the investment opportunity constitutes a "security" for purposes of state and federal securities laws. If an investment is a "security," those involved must comply with federal and state securities laws in connection with the original issuance and any subsequent transfer of the investment. For example, most securities transactions must be registered or satisfy a registration exemption. Also, anti-fraud rules apply to securities transactions, and state and federal securities regulators have jurisdiction over them. In addition, pooled investment entities that are investing in securities may be required to register as investment companies and those selecting the investments by such entities may need to register as investment advisers. The failure to comply with these requirements may have significant consequences and may trigger, among other consequences, rescission rights, damages, and civil penalties under federal and state law....