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:


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, To subscribe to FundLaw, send a blank e-mail to

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.  

Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page -, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.