(June 2 – 10:00 ET) – The U.S. Securities and Exchange Commission and state securities regulators collaborated on a sweep against scam artists offering bogus promissory notes to investors.
The SEC says it initiated the sweep because these instruments are becoming popular methods of securities fraud. As a result of the sweep, state regulators have brought actions against numerous individuals on behalf of about 3,000 investors. The SEC has filed charges in 13 cases against 38 individuals and 22 firms.
The SEC says many of these schemes have a similar pattern: investors are promised high returns for little risk. In many of these cases, it is alleged that the sale of the promissory notes was made by independent life insurance agents lured by high commissions but acting as unregistered broker-dealers. The elderly were frequently the targets of these schemes.
Brad Skolnik, Indiana’s Securities Commissioner and president of the North American Securities Administrators Association says, “Investors are attracted to this type of investment because it has an aura of safety with an above market rate of return. Investors must never forget the first rule of finance: the greater the reward, the greater the risk. In today’s market, there’s no such thing as a ‘guaranteed’ 10% or 15% return.”
-James Langton