1. This case presents the important question whether syndicated loans are "securities" within the meaning of the securities laws, and what legal standard governs that determination. The Securities Act of 1933 defines "security" broadly to include a long list of instruments, such as "any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement," among many others. 15 U.S.C. §77b(a)(1). The Securities Exchange Act of 1934 contains a similar definition. 15 U.S.C. §78c(a)(10). Many state blue sky laws have similar language. See, e.g., Cal. Corp. Code § 25019; Mass. Gen. Laws 110A §401(k).

Although those definitions explicitly cover "any note," this Court has allowed courts to depart from that literal definition. In Reves v. Ernst & Young, 494 U.S. 56 (1990), the Court adopted the so-called "family resemblance" test. Id. at 63-67. Under that test, courts must presume that all "notes" are securities. But a party can rebut that presumption by showing that a particular note resembles a category of notes traditionally thought not to be securities—for example, "the note delivered in consumer financing," "the note secured by a mortgage on a home," or "notes evidencing loans by commercial banks for current operations." Id. at 65. Under Reves, courts consider four factors: "the motivations that would prompt a reasonable seller and buyer" to enter into the transaction, "the 'plan of distribution' of the instrument," the "reasonable expectations of the investing public," and "whether some factor such as the existence of another regulatory scheme significantly reduces the risk of the instrument." Id. at 66-67.

This case concerns a category of notes known as "syndicated loans." Unlike a traditional loan, syndicated loans do not involve a single bank or a small group of banks lending funds to a borrower. Instead, arranging banks split up a loan and "syndicate" the pieces to large groups of investors that routinely number in the hundreds. Those investors typically are not commercial banks but rather investment vehicles such as collateralized loan obligations ("CLOs"), investment banks, hedge funds, pension funds, and mutual funds. After the initial distribution, syndicated loans typically trade on structured secondary markets.

Whether syndicated loans constitute 'securities' under the Reves 'family resemblance' test and the Securities Act of 1933