Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 21

National Union Fire Insurance Company of Pittsburgh, PA, issued securities but failed to register them, as federal securities law required. Shashi Pachnanda had signed a promissory note in exchange for some of the securities. Violation of the securities law made obligations for the securities voidable. When the promissory note was not paid, National Union sued Pachnanda, alleging it was a holder in due course. Pachnanda raised the defense that the securities were illegal. Was this defense good?