"Opportunity doesn't always knock… sometimes it rings." And sometimes it hangs up. So it did for the 10,000 people who invested a total of $300 million in the payphone sale-and-leaseback arrangements touted by respondent under that slogan. The Securities and Exchange Commission (SEC) argues that the arrangements were investment contracts, and thus were subject to regulation under the federal securities laws. In this case, we must decide whether a moneymaking scheme is excluded from the term "investment contract"simply because the scheme offered a contractual entitlement to a fixed, rather than a variable, return.

SEC v. Edwards, No. 02-1196 (Jan. 13, 2003) (slip op.) at 1 (record citation removed for clarity). The irony that this 9-0 decision authored by Justice O'Connor appeared two months after oral argument (with two major holidays in between) and the morning after a long segment on the Lehrer Report during which John Yoo argued that Justice O'Connor likes to be "in the middle" is a bit much.

Justice O'Connor's apparent ire is well-founded. She uses the term "scheme" instead of "program" for good reason: the defendant's sale-and-leasback arrangements were a pyramid scheme, depending for much of the "fixed return" on new money invested by new suckersparticipants. Yet another reason that F. Lee Bailey should not have started defending white-collar crime…

I am eagerly awaiting the Perfesser's take on this; it should be good for some laughs at the expense of somebody or other.