Have you been damaged as the result of investment fraud? Representation accepted on a contingent fee basis.  » View Our New Client Questionnaire « 
Arbitration Securities
and Investment Fraud Lawyers
Guiliano Law Firm Securities Arbitration blog
Home > Securities Arbitration Blog > Life Partners Holdings Inc Newest Viatical Settlement Scam

Life Partners Holdings, Inc. -- Newest Viatical Settlement Scam

Filed in:
Posted: February 7, 2011 @ 8:49 pm - Nicholas Guiliano
    Viatical Settlements are always ranked by the North American Securities Administrators Association as one of the top ten investment scams of all times.

The securities regulators of the various states seem to also agree, and since 1994, have entered no less than 191 cease and desist orders or enforcement proceedings concerning the sale of viatical settlements.

Viatical settlements allow investors to invest in another person's life insurance policy. With a viatical settlement, you purchase the policy (or part of it) at a price that is less than the death benefit of the policy. When the seller dies, you collect the death benefit.

The Investors return depends upon the seller's life expectancy and the actual date he or she dies. If the seller dies before the estimated life expectancy, you may receive a higher return. But if the seller lives longer than expected, your return will be lower. You can even lose part of your principal investment if the person lives long enough so that you have to pay additional premiums to maintain the policy.

The Securities and Exchange Commission is investigating Life Partners Holdings Inc., a Waco, Texas, company that has arranged for investors to buy several billion dollars of life-insurance policies from their original owners, according to four people who have been contacted recently by the agency.

As part of its probe, the SEC's enforcement division has been seeking experts to analyze the way Life Partners has estimated the life expectancies of the insured individuals, these people say. The estimates—projections of how long the people might have to live—are a crucial part of the investment equation.

The shorter an insured person's expected life span, the more Life Partners generally can charge for that policy, because investors expect a faster payout. If the death comes later than anticipated, not only is the policy payout delayed, but investors who buy policies or parts of them must continue to pay premium bills while they wait to collect on a death benefit.

Questions about the accuracy of Life Partners' life-expectancy estimates were the focus of a December Page One article in The Wall Street Journal. The article reported that many of the insured people are living well beyond the company's estimates, suggesting that the 10% or 15% yearly returns promoted to Life Partners' investor clients may prove elusive for many.

Life Partners says it has sold 6,400 policies with a face value of $2.8 billion to 27,000 clients since its 1991 founding. Life Partners extracts often-hefty fees in the deals, averaging $308,000 apiece for the 201 policies sold in its most recent fiscal year. Investors often buy pieces of multiple policies.

Some states have claimed Life Partners' fractional-policy sales make it subject to state securities law. Life Partners in 2008 settled a fraud suit filed by Colorado regulators, agreeing to repurchase policies from many investors in that state. The settlement came with no finding of fraud.

Based on data Life Partners filed with the Texas Department of Insurance, the Wall Street Journal found that, for policies sold from 2002 through 2005, insured people outlived Life Partners' projections about 90% of the time. Many of those policies were on HIV-positive people; Life Partners since 2004 mostly has sold policies on older people.

According to a press release dated February 03, 2011, a class action complaint was filed against Life Partners Holdings, Inc. alleging that the company issued materially false and misleading statements regarding the Company's business and financial results.

Life Partners Holdings is also alleged to have failed to disclose to investors that it was shortening the estimated life expectancies of insured individuals. As a result, the Company was making the policies covering these individuals more attractive to potential investors, as the potential "payout" from the policies maturing (when the insureds died) would occur in a shorter period of time.

Had the Company used accurate and appropriate estimated life spans, Life Partners Holdings would not have been able to sell as many policies to investors and earn the additional and increased transaction fees for these insurance policies.

Life Partners Holdings, Inc. sold these investments through various brokerage firms.

If you have lost money as a result of an investment in Life Partners Holdings, Inc. you may have a claim against your stockbroker or investment professional for the failure to perform due diligence in connection with the sale of these securities.

In order to pursue these individual claims against your stockbroker or investment professional in connection with the sale of viatical settlements sold by Life Partners Holdings, you should contact a lawyer experienced in securities arbitration matters.

Our practice is limited to claims against stockbrokers and investment professionals for fraud in connection with the sale of securities, the sale of unsuitable securities, failure to perform due diligence, breach of fiduciary duty, negligence, selling away, and the failure to supervise. If you have been the victim of investment fraud, contact us for a free evaluation of your claim. All matters are accepted on a contingent fee basis. Please call us toll free at (877) SEC-ATTY, or for more information visit us at www.securitiesarbitrations.com.

Nicholas J. Guiliano, Esquire, The Guiliano Law Firm, P.C.


 Life Partners Holdings, Inc. Complaint     SEC Life Settlement Task Force Report
Blog Article Search
 

Subscribe!
RSS Subscription

Recent Articles
  Lawyers Tempt Fate Before Second Circuit and No One Likes What They May Get  -  Last year, a Connecticut based hedge fund, Turnberry Capital Management LP...
  FINRA tries to be less than a day late and a dollar short  -  Reuters announced today that while it did not publicize the change, the Fi...
  A Glaring Look at Financial Fraud in the United States  -  The National Center for Victims of Crime released a report in conjunction ...
  FINRA Says: Don’t get Smoked by Dope Stocks: Lay-off the Weed  -  The Financial Industry Regulatory Authority or FINRA is dedicated to inves...
  US Third Circuit Court of Appeals: You should have known better than to trust FINRA.  -  Investors seeking to recover their damages as a result of the sale of defe...
  US Third Circuit Court of Appeals: You should have known better than to trust FINRA.  -  Investors seeking to recover their damages as a result of the sale of defe...
  Cockroaching, More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities  -  The pattern of brokers moving from one problem firm to another, according ...
  Cockroaching, More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities  -  The pattern of brokers moving from one problem firm to another, according ...
  Stockbroker to the Stars, Bambi Holtzer, has been suspended FINRA  -  Beverly Hills stockbroker, Bambi Holzer, who wrote books, made television ...
  Pennsylvania Securities Commissioner Fines Wall Street Financial Group $125,000 Bars Broker For Life  -  Wall Street Financial Group, Inc. of Fairport, New York appears to operate...

Investment Literature
BRE-X: The Inside Story

BRE-X: The Inside Story

The Real Case Against Goldman Sachs

The Real Case Against Goldman Sachs


Archive
January - 2009   2010   2011   2012   2013   2014  
February - 2009   2010   2011   2012   2013   2014  
March - 2009   2010   2011   2012   2013   2014  
April - 2009   2010   2011   2012   2013   2014  
May - 2009   2010   2011   2012   2013   2014  
June - 2009   2010   2011   2012   2013   2014  
July - 2009   2010   2011   2012   2013   2014  
August - 2009   2010   2011   2012   2013   2014  
September - 2009   2010   2011   2012   2013   2014  
October - 2009   2010   2011   2012   2013   2014  
November - 2009   2010   2011   2012   2013   2014  
December - 2009   2010   2011   2012   2013   2014  

Categories
» Brokage Firm Fraud (97)
» Broker Fraud (68)
» CCO Investment Services Corp (2)
» FINRA Securities Arbitration (114)
» Insider Trading (15)
» Investment Fraud (132)
» Merrill Lynch (16)
» Morgan Stanley (20)
» Mutual Fund Fraud (23)
» Oppenheimer Rochester Funds (1)
» Preferred Securities Fraud (1)
» RBC Capital Markets (2)
» Richard Byerly (1)
» SEC (87)
» Stockbroker Arbitration (31)
» stockbroker theft (7)
» structured products (1)
» Unfair Securities Practices (99)
» Wachovia Securities, L.L.C. (2)
» Wells Fargo Securities, L.L.C. (3)

Bookmark and Share




FINRA Securities Arbitration
- Arbitration is Litigation
- The Securities Arbitration Process
- The Arbitrators
- Discovery
- Arbitration Awards

Latest Securities News
- Archive

Claims Against Brokers
- Suitability
- Misrepresentations and Omissions
- Mutual Fund Fraud
- Annuity Fraud
- Failure to Supervise
- Breach of Fiduciary Duty
- Unauthorized Trading
- Securities Of Financial Institutions

Investor Resources
- Check Your Broker
- Check Your Brokerage Firm
- Check Your Investment Advisor
- Investor Resource Links
Securities Arbitration Blog
- Archive
- Categories

Contact Us
- Online Contact Form
- Evaluation Process
- Frequently Asked Questions

About The Firm
- The Lawyers
- The Professional Staff
- The Green Initiative
Our Office Location(s):
230 South Broad Street
Suite 601
Philadelphia, Pennsylvania 19102

Telephone: (215) 413-8223
Telecopier/Fax: (215) 413-8223
Toll Free: (877) SEC-ATTY
Email: contact@securitiesarbitrations.com

Martindale-Hubbel
View Disclaimer
Copyright 2014 ©. All rights reserved. Nicholas J. Guiliano, Esquire
Philadelphia Lawyer - Stockbroker Fraud - Investment Fraud Lawyer