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Promissory Note Regulatory Sweep

Fraud Schemes Attacked by SEC and 28 State Regulators

By John M. Baker, Esq.


The SEC and 28 state securities regulators announced on June 1, 2000 enforcement actions against hundreds of individuals and entities involved in the fraudulent sale of promissory notes to investors.

The regulators noted that promissory notes can be appropriate investments for many individuals, but regulators recently have become concerned about the increasing use of promissory notes as vehicles to defraud.

Many of the sales were made by independent life insurance agents acting as unregistered broker-dealers, and investors (who typically were elderly) in many cases were falsely told that the notes were guaranteed by offshore insurance or surety companies or otherwise collateralized.

Both the SEC and the North American Securities Administrators Association have posted press releases with links to additional information:

http://www.sec.gov/news/promswp.htm

http://www.nasaa.org/whoweare/media/promissorysweep.htm


Copyright 2000, John M. Baker, Esq., Stradley, Ronon, Stevens & Young, LLP, 1220 19th Street, N.W., Suite 700, Washington, DC 20036 – (202) 822-9611- Fax (202) 822-0140 This article was originally posted to the FundLaw List, http://www.egroups.com/group/fundlaw. To subscribe to FundLaw, send a blank e-mail to fundlaw-subscribe@egroups.com


Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.  


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