Reiswig

Introduction

This case presents a single issue: Whether the investment offered by Fidelity Insured Deposits, Inc. (Fidelity), constitutes a security under California law, subject to the regulatory jurisdiction of the California Department of Corporations (DOC). We conclude the investment was not a security and affirm.

Fidelity offered prospective investors yields on certificates of deposit (CD’s) greater than was available at any bank. Prospective customers were required to make an appointment and personally meet with a Fidelity sales agent. The sales agent would inform the prospective customer the higher yield was available only on the first $5,000 invested; if the customer wished to invest more, the sales agent would offer a fixed annuity as an alternative to a CD. If the customer wanted the CD, the sales agent would provide the customer a list of banking institutions offering the highest rates on Federal Deposit Insurance Corporation (FDIC) insured CD’s. Upon proof the customer opened a CD from an institution on the list, Fidelity would cut and send the customer a bonus check equal to the difference between the yield paid by the banking institution and the yield…