The City Savings Association, an Illinois savings and loan association is now in process of voluntary liquidation. When this Complaint was filed in the United States District Court, the Association was in the custody of the defendant, Joseph E. Knight, Director of Financial Institutions of the State of Illinois. He had assumed custody on June 26, 1964, under authority of the Illinois Savings and Loan Act, Illinois Revised Statutes, Chapter 32, § 848. The defendant Justin Hulmán is the Supervisor of the Savings and Loan Division of the Department of Financial Institutions.
At a special meeting on July 28, 1964, the shareholders of City Savings approved a plan of voluntary liquidation and elected the defendants Louis Kwasman, Harry Hartman and Dennis Kirby liquidators to carry out the plan which was approved by the Department of Financial Institutions as evidenced by a certificate filed with the Cook County Recorder of Deeds on August 7, 1964, at which time the plan became effective.
Meanwhile, on July 24,1964, this action was filed by the plaintiffs-appellees, Alexander Tcherepnin, Ming Tcherepnin, et al., who describe themselves as purchasers, at various dates, of securities issued by City Savings, consisting of capital shares of and a capital interest in City Savings.
Under the Illinois Savings and Loan Act, Illinois Revised Statutes, Chapter 32, §§ 701-944, an association unable to meet its cash commitments could limit the amount of cash a depositor might withdraw [§ 773(b)] as City Savings did in 1958. It was then prohibited from accepting new deposits. The Act was amended on July 9, 1959 [§ 773(h)] to allow acceptance of new deposits on which it was prohibited to place limitations of withdrawal.
The accounts represented by the plaintiffs according to the Complaint were all opened under the 1959 amendments and hence are fully withdrawable despite the conclusory assertions in the Complaint that plaintiffs purchased their shares on a restricted withdrawal basis.
The plaintiffs brought this action for themselves and all other persons who made deposits in City Savings since July 23, 1959, to have their purchases of shares declared void and to be declared creditors of City Savings.
They invoked jurisdiction of the District Court under § 27 of the Securities Exchange Act of 1934 (Title 15, U.S.C. § 78aa). Diversity of citizenship is lacking here. In addition to those noted above, the Complaint lists as defendants: the City Savings Association, and certain of its former officers and directors.
The Securities and Exchange Commission was allowed to intervene as amicus curiae. A group purporting to represent other depositors was allowed to enter the case as party-defendants.
The Complaint alleged that in making their deposits the plaintiffs relied on false and misleading solicitations mailed to them in violation of § 10(b) of the Securities Exchange Act of 1934, and of the General Rules and Regulations promulgated thereunder, which rendered their purchases void under § 29(b) of the Act entitling them to rescind their investments and to recover the amount of their investments plus interest.
The defendants City Savings and the three liquidators moved to dismiss the Complaint for lack of jurisdiction in the District Court because the subjects of the action — withdrawable capital accounts of a state-chartered savings and loan association — were not “securities” within the meaning of the Act. The other defendants also moved to dismiss the action. All the motions were denied.
The question presented by denial of motion to dismiss was certified by the District Court under § 1292(b) of the Judicial Code (Title 28 U.S.C. § 1292(b)). This Court granted petition for leave to file interlocutory appeal.
*376We are thus presented with one contested issue: is a withdrawable capital account in an Illinois-chartered savings and loan association a “security” within the meaning of that term as it is used in the Securities Exchange Act of 1934?
The plaintiffs-appellees and the Securities and Exchange Commission, which has filed its brief in these cases as amicus curiae, both assure us that a withdraw-able capital account in an Illinois-chartered savings and loan association is such a “security”; that Congress intended to include such accounts within the broad definition of the Act, particularly as shown by subsequent amendments. They also point to court decisions classifying as “securities” some interests which possess some similar characteristics, which they view as the fundamental characteristics of these accounts. On the other hand, they see the other rather strikingly distinctive characteristics of these accounts, on which the appellants rely, as not fundamental but as merely subsidiary, some of even these being also present in other interests which have been accepted as securities.
The Act provides the following definition of a “security”:
“The term ‘security’ means any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit, for a security, or in general, any instrument commonly known as a ‘security’; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or banker’s acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited.” Securities Exchange Act of 1934, § 3(a) (10), 15 U.S.C. § 78c(a) (10)
The type of interest now before us, if it is covered by this definition, must be an “instrument commonly known as a ‘security’.”
The report accompanying the predecessor Act, cited as the Securities Act of 1933, noted that the term “security” was so defined as to include the many types of instruments which in the commercial world fell within the “ordinary concept of a security.” H.R.Rep. No. 85, 73rd Cong., 1st Sess. 5/4/33 p. 11.
As appellants state, these accounts are unlike the ordinary concept of a security in such characteristics as being permissibly issued in unlimited amounts; as not made subject to the securities article of the Uniform Commercial Code; as not negotiable and transferable only by assignment; as subject to forced redemption and retirement on call of the board of directors; as fully matured and with-drawable when issued; as without preemptive rights; as evidenced by an account book, the holders of which are not entitled to inspect the general books and records of the association; although entitled to vote for directors, to give a proxy which may (and usually does) provide that it is irrevocable, and which is typically executed when the account is opened, and to receive dividends.
The Illinois statutes which created withdrawable accounts in savings and loan associations show clearly that the Illinois legislature did not intend them to be securities. It thus seems difficult to assert that these interests can be “commonly known as a security.”
According to its preamble, the Securities Exchange Act is designed to regulate transactions in securities as commonly conducted on securities exchanges and over-the-counter markets, the price of such securities being susceptible to manipulation and control and the dissemination of such prices giving rise to excessive speculation resulting in sudden and unreasonable fluctuations in the prices of securities.
*377The 1934 Act expressly excludes debtor-creditor relationships represented by notes maturing in nine months of issuance. The interest with which we are concerned is mature at issue.
The Federal Bankruptcy Act, Title 11 U.S.C. § 22, exempts State building and loan associations from federal bankruptcy adjudication. See Security Building & Loan Ass’n v. Spurlock, 9 Cir., 1933, 65 F.2d 768, 771, where the Court quotes extensively with approval from Rep. 98, 72d Congress, 1st sess. House Judiciary Committee; House Reports 2-659, 72d Cong. 1st sess., indicating Congressional determination to leave the administration of State created building and loan associations in the local courts. We may assume that City Savings would be exempt from the provisions of the Bankruptcy Act. Home Savings and Loan Ass’n v. Plass, 9 Cir., 1932, 57 F.2d 117.
In S.E.C. v. C. M. Joiner Leasing Corp., 320 U.S. 344, 352-353, 64 S.Ct. 120, 124, 88 L.Ed. 88 (1943), the Court was considering whether assignments of oil leases were securities under the Act. In that connection the Court said:
The test rather is what character the instrument is given in commerce by the terms of the offer, the plan of distribution, and the economic inducements held out to the prospect.
At another point (320 U.S. p. 351, 64 S.Ct. p. 123) the Court said:
[T]he term “security” was defined to include * * * documents in which there is common trading for speculation or investment.
In S.E.C. v. W. J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946) the Court said:
The test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others.
An “investor” in a savings and loan association lends his money to be with-drawable at will and to earn interest. The relationship with the enterprise is much more that of debtor-creditor than investment. The profit is derived from loans to other members of the savings and loan association. This is not investment in a common enterprise with profits to come solely from the efforts of others.
The Securities Act of 1933 and the Securities Exchange Act of 1934 were passed in the aftermath of the great economic disaster of 1929. Congress was concerned with speculation in securities which had a fluctuating value and which were traded in securities exchanges or in over-the-counter markets.
The S.E.C. relies heavily on a recent amendment. Section 12(g), Title 15 U.S. C. § 781(g), provides for registration of certain equity securities. There is a specific exemption of “any security [with certain exceptions not pertinent here] issued by a savings and loan association” § 12(g) (2) (C). The S.E.C. thus argues that the definition of “security”, supra, must include interests which are referred to as securities in this exemption.
If these interests were already excluded by the definition, the Commission argues, then the exemption would be meaningless or would have to be interpreted as referring to some other undefined security of a savings and loan association.
In its Technical Statement on H.R. 6789, H.R. 6793, and S. 1642, submitted at the Hearings before a Subcommittee of the Committee on Interstate and Foreign Commerce; House of Representatives, 88th Congress, 1st Session (1963), p. 215, the S.E.C., while referring to all other interests which it recommended for exemption as being “securities”, speaks of “share accounts” when referring to the savings and loan associations, suggesting that a distinctive view was held of these interests by the Commission itself.
The S.E.C. sees no significance in the omitting from the definition in the 1934 Act of the term “evidence of indebtedness” which does appear in the definition in the 1933 Act. These Acts were considered to have been substantially the same. The S.E.C. sees the omission as merely indicative of a different draftsman.
*378The Commission also notes that there was apparently no discussion of savings and loan interests at the time the 1934 Act was passed.
However, appellants invite our attention to the lengthy consideration of the term “evidence of indebtedness” in connection with the 1933 Act. (Hearings on S. 875 before Senate Committee on Banking and Currency, 73rd Cong. 1st sess., pp. 94-120 passim.)
Some of the Senators evidently saw a relationship between this term “evidence of indebtedness” and accounts in building and loan associations as well as between the term and various short term banking transactions. There was some fear that the 1933 Act would interfere with ordinary commercial banking transactions. The term was retained but certain short-term debtor-creditor transactions were exempted. The same Congress which in 1933 had been considering the relationship between the term “evidence of indebtedness” and accounts in building and loan associations, excluded that term from the 1934 Act, retaining only such evidences of indebtedness as long-term notes, bonds and debentures. Yet the Investment Act of 1940, Title 15 U.S.C. '§ 80a-2(a) (35), for example, retains the term in its definition of “security”. ■Congress must have had some intention ■ of excluding those interests which fell under the broad character of “evidence •of indebtedness.”
The definitions set out in the Act are all preceded by an introductory statement that they apply “unless the context otherwise requires.”
Perhaps insurance policies may provide a useful analogy. In discussing mutual insurance companies over whom the S.E.C. does not claim jurisdiction, Chairman William L. Cary of the S.E.C. said:
[W]e do say that mutual insurance companies are not included under this bill because the buyers in mutual insurance companies are fundamentally buying insurance. * * * and not stock. Furthermore, because there is no stock, there is no trading in the stock. (House Hearings, 1963, supra, p. 309.)
Basically that distinction applies to holders of “share accounts” in savings and loan associations. There is no stock or trading in stock.
A little later, Chairman Cary said:
[Sjince the holders in mutual companies are policy holders, any wrongdoing would be the responsibility of the State superintendent of insurance.
With respect to City Savings, also, the local State authorities are ready and able to handle the orderly disposition of the institution’s liquidation.
Insurance policies were exempted from the Securities Act of 1933 [Title 15 U. S.C. § 77c(a) (8)] and under the 1964 amendments [Title 15 U.S.C. § 781(g) (2) (G)]. Are they necessarily included in the definition of “securities”?
Professor Loss (Securities Regulation, 2d. ed. 1961, p. 497) says that on its face the exemption of insurance policies in the 1933 Act seems to create a negative implication that insurance policies are securities which may be exempt from registration but are subject to the anti-fraud provisions. He observes that the Commission takes the position with respect to insurance policies that they are not intended to be “securities”.
Chairman Cary advised, in the course of the Hearings before the Subcommittee in 1963, supra, p. 300, that while his Commission regulated offering of variable annuities as an offering of securities subject to the 1933 Act, he wanted to emphasize the fact that it was only the investment company operation that was regulated; that “we don’t touch the insurance operations that they may have.”
Professor Loss also notes that the House Report states that the purpose of the exemption is to make clear what was implied in the Act, that insurance policies are not to be regarded as securities subject to the provisions of the Act. See H. R. Rept. 85, 73rd Cong., 1st sess. (1933) 15, cited in S.E.C. v. Variable Annuity Life Ins. Co., 359 U.S. 65, 74, n. 4, 79 S.Ct. 618, 3 L.Ed.2d 640 (1959) in Jus*379tice Brennan’s concurring opinion, where he states that under the Securities Act of 1933, it would appear that for ordinary insurance policies the exemption is just confirmatory of the policy’s non-coverage under the definition of security.
H.R. Rept. 85 states that:
The entire tenor of the act would lead, even without this specific exemption, to the exclusion of insurance policies from the provisions of the act, but the specific exemption is included to make misinterpretation impossible.
It seems likely that the specific exemption of the interest here under consideration was also inserted for the same reason. This seems a more reasonable interpretation than that urged on us by the appellees and the Commission.
The appellees and the Commission cite a number of cases from which we are invited to draw analogies favorable to their view. However, these deal largely with the 1933 Act which included the broad term “evidence of indebtedness” which, as indicated, was excluded from the 1934 Act with which we are here concerned, or which are otherwise not directly helpful. Neither the parties nor this Court has found a case directly in point.
We have carefully considered all other arguments advanced and have studied all authorities cited. It is our opinion that these interests are not encompassed in the definition of a “security” under the 1934 Act; that the anti-fraud provisions of that Act are not here applicable; and that the District Court lacked jurisdiction of this cause.
The decision of the District Court is therefore reversed and the cause is remanded with instructions to dismiss the Complaint.
Reversed and remanded with instructions.