The United States regulates securities more heavily than perhaps any other type of property. Our securities laws consist in some half dozen major federal acts and thousands of lines of regulation. An entire federal agency, the Securities Exchange Commission, is charged exclusively with securities oversight. The financial-services industry has layered on its own rules. Every state has its own securities laws and regulators. Private securities litigation is big business. Securities regulation is nearly endless. But there’s just one thing. What exactly is a security?

In a historic sense, a security was literally that: security. It was an assurance of investment. It theoretically meant that the investment was safe and, well, secure. But of course, securities were never all that secure. In fact, they have always been quite risky, which is the reason we now have so many securities laws, rules, and regulations.

For most purposes, the definition of a security found in The Securities Act of 1933–or the effectively identical definition in the Securities Exchange Act of 1934–is what courts will look to when there is any question. The ’33 Act defines a security as:

Any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, per-organization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therin or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the forgoing.

Many of the items on that list shouldn’t surprise you. Stocks are securities. Bonds are securities. These are paradigmatic. But from there, the list starts to get a bit fuzzy.

The broadest and least defined element of the securities definition is the term “investment contract.” Securities enforcers and private plaintiffs have hung quite a bit on this amorphous term. Everything from scotch whiskey to earthworms, vacuum cleaners, and even an orchard full of fruit trees has been determined to be a security, largely on the basis of this term, “investment contract.”

In SEC v W.J. Howey Co., the US Supreme Court defined the term “investment contract” as:

A contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.

And as it turns out, this definition is every bit as expansive as it appears. In fact, it’s more expansive than it appears, as strict compliance with the definition–for example, with the requirement that profits come solely from the work of another–is not always required. It should be no surprise that the Securities and Exchange Commission and others look to this definition where a business or promoter has attempted to skirt around the securities laws. It’s a catch all.

The answer to the question of what is a security, then, is that anything can be a security if it is packaged and sold in a way that leads others to believe that by purchasing the product, they will earn a profit with little or no effort on their part. The edges of the definition will always be hazy, but the core is clear. Any offering to outsiders of an opportunity to invest in a piece of a company, in future profits, or in growth is a security, and the securities laws apply to that offering and every subsequent transaction involving the security sold.

As you can see, while some instruments are clearly securities, the scope of the securities laws is broad and at times unpredictable. Furthermore, securities laws apply to every sale of any security, whether or nor the seller knows the property in question is a security. Innocent ignorance is no excuse. If you or your business plans to sell a security, or anything that would arguably fall within the definition of an investment contract, tread carefully. Beyond the definition, securities laws only get more complex. And securities violations–even innocent securities violations–may be met with severe sanctions ranging from civil judgments and fines to injunctions and even imprisonment.