SEC Amicus Brief in Salameh v. Tarsadia Hotel (9th Cir.)

Brief of SEC, Amicus Curiae in Salameh v. Tarsadia Hotel (9th Cir No. 11-55479)

August 5, 2011

The SEC submitted an amicus brief in Salameh v. Tarsadia Hotel, a case in the Ninth Circuit Court of Appeals regarding whether certain real estate interests are "securities" for the purposes of the federal securities laws. The case deals with the sale of hotel rooms and related rental-management agreements in a luxury hotel that the defendants developed. During development, the defendants "sold" the rooms to plaintiffs and then entered into rental-management agreements with the plaintiffs that essentially denied the plaintiffs use of the rooms. The SEC argues that the district court, which found that the interests at issue are not securities, "failed to give effect to the economic and practical realities of the transactions." The district court had found that the sale and rental-management agreements were significantly separate transactions, and on their own, neither was a "security."

Please contact any of the following Cadwalader attorneys if you have any questions about this item: Steven Lofchie - steven.lofchie@cwt.com; Maurine Bartlett - maurine.bartlett@cwt.com.

Cross References

Salameh v. Tarsadia Hotels, 2010 WL 2839013 (S.D. Cal. July 20, 2010)Securities Act § 2(1), 12(a)(2)Exchange Act § 3(a)(10)SEC v. W.J. Howey Co., 328 U.S. 239 (1946)SEC Release 33-5347 (Jan. 4, 1973) (guidelines on the securities law application to sales of real estate units)