Promissory Notes

Promissory notes are a form of debt—similar to loans or IOUs—that companies sometimes use to raise money. They are investments that typically involve investors loaning money to a company in exchange for a fixed amount of periodic income. Although promissory notes can be appropriate investments for many individuals, some fraudsters have begun increasingly to use promissory notes as vehicles to defraud investors—especially the elderly—out of millions of dollars.

The SEC and state securities regulators announced a joint effort to combat the fraudulent sale of promissory notes to investors. This initiative has resulted in a significant number of enforcement actions.

For tips on how to avoid promissory note scams, read our online publication entitled Broken Promises: Promissory Note Fraud.