On March 5, 1990, the Supreme Court granted the petition for writ of certiorari in Holloway v. Peat, Marwick, Mitchell & Co., 879 F.2d 772 (10th Cir.1989), vacated the judgment, and remanded the case for further consideration in light of Reves v. Ernst & Young, --- U.S. ----, 110 S. Ct. 945, 108 L. Ed. 2d 47 (1990). --- U.S. ----, 110 S. Ct. 1314, 108 L. Ed. 2d 490. After re-examining Holloway, we adhere to the judgment entered therein. The facts of this case are described in our first Holloway opinion and will not be repeated here. See Holloway, 879 F.2d at 774-75.

In Holloway we developed a two-part approach based on a "investment versus commercial" test for determining when a note is a security. Part one focused on whether the instrument at issue was within the statutory definition of a security, 15 U.S.C. sections 78c(a)(10) (Securities Exchange Act of 1934) and 77b(1) (Securities Act of 1933) (collectively "the Acts"). See Holloway, 879 F.2d at 775-83. Part two examined whether other federal regulation governing the transaction rendered the protection of federal securities laws unnecessary. See Holloway, 879 F.2d at 783-88. Although the Reves approach differs from our two-part test in Holloway, we find that our outcome in Holloway remains unchanged after Reves.

Reves expressly rejected applying the test developed for "investment contracts," see SEC v. W.J. Howey Co., 328 U.S. 293, 66 S. Ct. 1100, 90 L. Ed. 1244 (1946), to "notes." See Reves, 110 S. Ct. at 951. Instead, the Court adopted a two step "family resemblance" test to determine when a "note" is a "security" within the coverage of the Acts.

[I]n determining whether an instrument denominated a "note" is a "security," courts are to apply the version of the "family resemblance" test that we have articulated here: a note is presumed to be a "security," and that presumption may be rebutted only by a showing that the note bears a strong resemblance (in terms of the four factors we have identified) to one of the enumerated categories of instrument[§ that are not "securities" based on a judicially crafted list of exceptions]. If an instrument is not sufficiently similar to an item on the list, the decision whether another category should be added [to the list of "notes" that are not "securities"] is to be made by examining the same factors.

Id. at 952.

The four Reves factors used to rebut the note's presumed status as a security are: (1) an examination of the transaction to assess the motivations which would prompt a reasonable seller and buyer to enter into it; (2) the plan of distribution of the instrument; (3) the reasonable expectations of the investing public; and (4) whether some factor such as the existence of another regulatory scheme significantly reduces the risk of the instrument, thereby rendering the protection of federal securities laws unnecessary. See id. at 951-52. We use these factors in step one of the Reves test to determine whether the note at issue bears a strong family resemblance to a category of "nonsecurities" on the judicially created list of exceptions. If the note does not resemble an existing category of nonsecurities, we proceed to step two of the Reves test and use these factors to determine whether we should create a new exception for the note at issue.

Applying Reves to the instruments in this case, we presume that the instruments are securities. Under Reves step one, we find that the instruments at issue do not resemble any category on the judicially recognized list of nonsecurities. See Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930, 939 (2nd Cir.1984); Exchange Nat'l Bank v. Touche Ross & Co., 544 F.2d 1126, 1138 (2nd Cir.1976). Reves step two dictates that we next examine the instruments in light of the four guideline factors to decide whether these instruments should be added to the judicial list of nonsecurities.

We essentially performed the Reves analysis of whether a new category of nonsecurities should be created for these instruments in our original Holloway opinion. See Holloway, 879 F.2d at 775-88. In Holloway we relied on eight factors cited favorably in Zabriskie v. Lewis, 507 F.2d 546, 551 n. 9 (10th Cir.1974), as indicia of a security. Reves 's four-factor approach supercedes our Zabriskie eight factor analysis. However, most, though not all, of the facts we analyzed under the Zabriskie factors are incorporated into the Reves factors.1 Thus, our ultimate decision in Holloway remains unchanged under Reves.

Reves did not address whether federal courts may consider state regulation of a note when evaluating whether the presumption that the note is a "security" has been rebutted. However, in applying the fourth Reves factor the Supreme Court's emphasis clearly was on federal regulation:

Finally, we find no risk-reducing factor to suggest that these instruments are not in fact securities. The notes are uncollateralized and uninsured. Moreover, unlike the certificates of deposit in Marine Bank [v. Weaver, 455 U.S. 551, 102 S. Ct. 1220, 71 L. Ed. 2d 409 (1982) ], which were insured by the Federal Deposit Insurance Corporation and subject to substantial regulation under the federal banking laws, and unlike the pension plan in Teamsters v. Daniel [439 U.S. 551, 99 S. Ct. 790, 58 L. Ed. 2d 808 (1979) ], which was comprehensively regulated under the Employee Retirement Income Security Act of 1974, the notes here would escape federal regulation entirely if the Acts were held not to apply.

Reves, 110 S. Ct. at 953 (citations omitted) (emphasis added). Moreover, Reves rejected state law on when a demand note "matures" in favor of a federal rule designed to further the remedial purposes of the Acts. See id. at 954-55. By analogy, state regulation of the transaction should not be a factor governing application of the remedial federal securities laws. We therefore reaffirm our holding in Holloway that under the supremacy clause, U.S. Const. art. VI, cl. 2, our focus must be on federal regulation; state regulatory schemes cannot displace the Acts. See Holloway, 879 F.2d at 783-86.

Even if an issuer cannot rebut the presumption that a note is a security under the family resemblance test, the note may still be excluded from the coverage of the Acts if it "has a maturity at the time of issuance of not exceeding nine months." See 15 U.S.C. section 78c(a)(10). Reves held that under federal law the "maturity" of a demand note falls outside of the section 78c(a)(10) exception for short-term notes. See Reves, 110 S. Ct. at 955. Therefore, section 78c(a)(10) does not exclude those debt instruments in Holloway which are payable on demand from the coverage of the Acts. As for the remaining instruments at issue which have a thirty-day notice requirement prior to redemption, we reaffirm our holdings in Zabriskie and Holloway that the section 78c(a)(10) exception for short-term notes is limited to prime quality negotiable commercial paper of a type not ordinarily purchased by the general public. See Holloway, 879 F.2d at 778; Zabriskie, 507 F.2d at 550.2 Because none of the thirty day redemption instruments at issue in Holloway qualify as "prime quality negotiable paper," section 78c(a)(10) does not exclude these instruments from the federal securities laws.

We reaffirm our judgment in Holloway. We REVERSE the summary judgment in favor of the defendants as to the RTS instruments and REMAND to enter summary judgment in favor of the plaintiffs. We AFFIRM the grant of summary judgment for the plaintiffs as to the RFC instruments. We REVERSE the summary judgment in favor of the plaintiff as to the RBI note and REMAND for further consideration of the context of the underlying transaction consistent with Reves and this opinion.