I Called the SEC

In my last post I asked, "Is a promissory note considered a security?"

I further asked, "What does the SEC have to say?"

I then cited some information found on the SEC website that makes the statement:

"Most promissory notes must be registered as securities with the SEC and the states in which they’re being sold."

This morning I called SEC Toll-Free Investor Information Service at 1-800-SEC-0330. I easily reached a representative and explained the reason for my call. She made a statement along the lines of,

"Unless a Promissory Note is sold on an exchange it does not need to be registered with the SEC."

She then suggested I call the SEC Office of Small Business Policy. I'm not 100% on whether this is the most appropriate direction, but I took her advice and called.

The automated answer states, "If you have an interpretive or policy question" to leave a message and a lawyer will call back. So that's what I did. My question being:

"I have purchased Promissory Notes through the website, Prosper.com, a peer-to-peer lending site. Do these Promissory Notes require registration as securities with the SEC?"

(I explained that loans are "made" by WebBank, then "assigned" to Prosper, and then "assigned/sold" to individual investors)

I further asked:

"Is Prosper.com considered a broker/dealer of the Notes, and are they required to register as such with the SEC"

I will follow up on this.

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