Promissory Note Fraud

A promissory note is a type of debt that is similar to a loan or an IOU that a company may issue to raise money. Typically, an investor will agree to loan money to a company or institution for a determined period of time. In exchange, the borrowing company promises to pay the investor a fixed return on his or her investment, typically principal plus annual interest.

Has your company become a victim of promissory note fraud? If so, contact one of our experienced securities lawyers in your area today!

Tips to protect your company from promissory note fraud:

  • Be cautious of notes that mature in nine months or less.
  • Invest only in things you understand.
  • Higher reward usually means higher risk. Don't be afraid to ask questions of your advisor.
  • Watch out for the phrase "this is not a security."
  • Be wary of notes offered to "preferred investors only".

Although promissory notes can be appropriate investments for many individuals, they are increasingly being used as vehicles
to defraud investors out of millions of dollars and have become a growing problem for regulators. Promissory notes are often sold by insurance agents who may not realize they must be licensed as securities brokers to sell the notes. The person promoting the notes may have limited information, other than what the company offering the notes has told him/her. Even worse, sometimes what little information the agent does have is not completely accurate. Some notes are issued on behalf of companies that do not even exist. The agents who offer these notes are often lured by the promise of high commissions for promotion and sales.

Traditional boiler-room cold callers usually solicit clients by phone and have no relationship with them prior to the call. On the other hand, insurance agents know most of their customers well, but not all of them have a license to sell securities.

Only an experienced securities lawyer will have the knowledge and experience to fight your case in court if you have become a victim of promissory note fraud. Don't hesitate. Contact one of our securities fraud lawyers in your area immediately.

Has your company become a victim of promissory note fraud? If so, contact one of our experienced securities lawyers in your area today!

Updated: LW

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Has your company become a victim of promissory note fraud? If so, contact one of our experienced securities lawyers in your area today!

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