Ian Anderson 2 p.m., March 9
SEC Enters Hard Rock Hotel Appeal
The Securities and Exchange Commission has filed a friend of the court brief in favor of those suing Tarsadia Hotel, parent of Hard Rock Hotel. Tarsadia sold hotel rooms to the public. People could only occupy the rooms for 28 days under the contract. The rooms were under the control of Tarsadia. The suit, which maintained that the contracts were securities that should have been registered with the SEC, was thrown out at the district level, but the SEC says the court erred seriously. Purchasers signing the contract were denied "the effective use and control of the units," and gave that control to Tarsadia. The contract stated that there were no investment expectations for purchasers, but "the economic and practical reality demonstrates that the transactions were investments," argued the SEC in the amicus curiae. The original suit was filed by the law firm of Aguirre, Morris & Severson. The contracts "constituted investment contracts under the federal securities laws," says the SEC.