The US Securities and Exchange Commission has filed civil charges against Singer Financial Corp. and its owner Paul Singer accusing them of illegally offering unregistered securities. The regulator’s complaint contends that they raised about $3.4M from at least 70 investors via unsecured promissory notes that were not registered while failing to qualify for an exemption from registration.
According to the Commission, Singer and his financial firm had at first tried for registration exemption for investment certificates that were almost identical to the promissory notes, but they gave up on their attempt and engaged in the illegal offering of the unregistered promissory notes instead. The SEC said that by not registering the promissory note offering with the regulator or obtaining qualification for registration exemption, investors were “deprived” of “critical information” about the risks involved in their investments. Also, investors in a previous offering ended up trading in their securities with promissory notes that had terms favoring Singer and his firm more than it did them. The notes also generally stretched out “repayment obligations.”
The SEC claims that Singer and his firm used marketing collateral that did not include financial statements, pervious performance facts, and other documents that are usually provided in such instances.