Discretionary Accounts

Abstract

The author examines the recent cases and rulings defining the circumstances under which discretionary commodity accounts will be considered a security. After describing the three major types of discretionary accounts the author concludes that only those accounts in which the broker and the investor have a common economic interest or dependence should be treated as securities. The author argues that in light of both the essential role in the commodities market played by discretionary accounts and the added investor protection provided by new commodities legislation, the courts should be slow to impose securities treatment upon discretionary accounts.