The Howey test takes its name from the case of SEC v. W.J. Howey Co., which involved a Florida company that sold tracts of land to investors. The company offered to lease the land back from the investors and promised to cultivate and harvest the land, with the profits from the harvests to be shared with the investors. The SEC alleged that the sale of these tracts of land constituted an unregistered securities offering.

The Supreme Court ultimately ruled in favor of the SEC, establishing the Howey test as a legal standard for determining whether an investment is a security. The Howey test has since been used in a wide range of cases to determine whether various types of investments, such as real estate partnerships, oil and gas leases, and even virtual currencies, are securities.