Four UGA football players were arrested for possession of marijuana at the Corey Smith concert the night before the UGA-Mizzou football game. Needing a $10,000 loan to bail them out, Mark Richt borrowed the money from Gary Pinkel and granted Pinkel a security interest in his 2011 SEC East championship ring; Pinkel agreed to make the loan so that the Bulldogs might face Mizzou with a complete roster). Richt executed a security agreement that properly described the ring.
Following the Tigers' beatdown of the Bulldogs, in the midst of the celebration Pinkel neglected to file a financing statement. Upon returning to Athens and realizing he was at risk of losing his job, a bitter Richt sold the ring to a rich Bulldogs donor for $8,000.
Which statement is correct?
1. Pinkel still has a valid security interest in the ring, but not the $8,000 cash paid to Richt.
2. Pinkel a valid security interest in the $8,000 cash paid to Richt, but not the ring.
3. Pinkel has a valid security interest in both the cash and the ring.
4. Pinkel has a valid security interest in the $8,000 cash, but may be subject to FTC sanctions for taking a nonpossessory nonpurchase money security interest in a household good.