True or false with explanations:

Tschetter v. Berven, 621 N.W.2d 372 (S. Dak. S. Ct. 2001) (Mallor 15^th Ed. p. 1182).

Marvie, Kim, Clarence, and Goldie Tschetter purchased units in Huron Kitchen LLC, a limited liability company, which would construct and own a Country Kitchen restaurant in South Dakota. As members of an LLC, they had management powers in proportion to their contributions of capital and could elect the managers of the LLC and set the managers' responsibilities. As LLC members, the W agreed to hire Country Hospitality Corporation to do much of the operation of the LLC. The LLC Operating Agreement required that the day-to-day decisions were made by two managers who were required to be members of the M selected by the other members. Members could authorize loans on behalf of the company by agreement. The members had the right to receive prots and distributions when warranted. The members could authorize incidental expenses within an aggregate of $12,500. The members were empowered to make any other routine actions incidental to the day-to-day activity of the LLC. The members were allowed to select ofcers for the LLC. Marvie, acting for all the m, exercised substantial control over the affairs of the LLC. Clarence and Goldie acquiesced in relying on Marvie and Kim for information and action. The minutes kept by the LLC showed that Wm informed and active in the LCC. Unfortlmately, the restaurant failed, and the m sued the person who sold them the interests in the [LC on the grounds that the LLC interests were securities, and therefore, the seller owed duties to them. 1. The LLC interests are deemed securities, because they met the requirement of the E Howey investment contract test that their expectations of prots depended solely on the efforts of persons other than themselves. 2. Under the Howey test, the W membership interests in Huron Kitchen LLC fail the horizontal commonality test for qualifying as an investment. 3. Huron Kitchen LLC can elect annually to be taxed as a partnership or to be taxed as a corporation. 4. The W' acquisition of units within Huron Kitchen LLC is governed by E the 1933 Securities Act, because hiring Country Hospitality Corporationto operate the LLC provides vertical commonality sufficient to qualify the LLC membership as Howey investment contracts. 5. If the LLC interests are deemed to be equity securities, the W can rescind E 5 their agreement to purchase units in Huron Kitchen LLC, because the company 5 failed to register those securities with the SEC before offering them to the 1mm