According to FINRA, Nicholas Edward Stovall of New Richmond, Wisconsin was barred from association with any FINRA member in all capacities for participating in private securities transactions totaling $1,401,690 without disclosure to or approval from his member firm.

Stovall participated in the sale of promissory notes issued by entities claiming to provide financing to construction companies. He recommended these investments to six customers who purchased $1,101,690 of the notes and personally invested $300,000.

Stovall's participation included explaining the notes' terms to investors, introducing them to the issuers, helping complete investment documents, and assisting with money transfers.

The notes' issuers ultimately defaulted and ceased operating. In 2022, two state securities regulators brought actions against the issuers and others, alleging the promissory notes were part of a fraudulent scheme. Although Stovall was not named as a defendant in those actions, the investments he recommended resulted in significant losses for his customers.

FINRA rules require registered persons to provide prior written notice to their firms before participating in private securities transactions. This requirement allows firms to supervise such activities and evaluate whether the investments are appropriate. When representatives sell products outside firm supervision, customers lose important protections.

For investors who purchased these promissory notes, the bar of Stovall and the default of the issuers likely means recovery prospects are limited. However, if you were one of Stovall's customers or invested in these promissory notes, you may wish to consult with a securities attorney about potential claims against Stovall's former firm or other parties.

Be extremely cautious about promissory notes offered outside of registered broker-dealer channels.