WHAT'S THE PROBLEM WITH PROMISSORY NOTES?
DON'T BE CAUGHT UNAWARE!
At The Law Offices of Jonathan W. Evans & Associates we understand the nature of promissory notes and their inherent investment risks. Though you may be intrigued by a promissory note with a promised high rate of return, you need to be aware of the amount of fraud that exists in the industry.
There are typically two main types of issues with promissory notes:
- Fraud and investor deception: Certain hallmarks of fraudulent promissory note schemes involve dishonest statements regarding the alleged high amount of returns on the investment, a guarantee of such returns, and collateral which supposedly backs these guarantees. These deceptive programs will often target the elderly and their retirement savings.
- Unregistered securities: Often promissory notes, while securities, are not registered. That means no securities regulator reviewed the issuer's prospectus or private placement memorandum. As a result, unregistered securities carry a great deal more investment risk.
- Unregistered sellers: In addition to securities regulation, those offering promissory notes are also required to have a securities sales license. Even if an individual is selling a note as a registered broker, they do not necessarily have their firm's approval to do so.
To take an example from real life regarding the dangers involved in promissory notes. Recently the CEO of the firm Success Trade was barred by the Financial Industry Regulatory Authority (FINRA) for selling more than $19.4 million in fraudulent notes to former NFL and NBA players which misrepresented or omitted certain facts. These individuals were promised a yearly return for three years of 12.5% on most of the notes with some promising as much as a 26% return.
YOUR ADVOCATE AGAINST PROMISSORY NOTE FRAUD
As an investor, you need to be aware of how promissory notes need to be carefully scrutinized. At The Law Offices of Jonathan W. Evans & Associates, we know how to defend our clients from promissory note fraud and can work to recover your losses from such a note. If you want to file a claim contact an experienced promissory note attorney from our firm today.