Structured Settlements 4Real: What's Real News in the Structured Settlements, Settlement Planning, Consulting and Lawsuit Recovery Space?

"Investment Tips" For Plaintiffs. Don't Follow This "Advice"!

Flushing a large settlement down the toilet is harder than it looks. Some "savvy" investors have spent years developing "sound financial plans" that would ensure complete and absolute financial doom.

 Claimants looking to follow down the hallowed path of economic idiocracy need to follow a strict plan if they hope to one day grace the cover of Bankruptcy Illustrated.  Thus, I thought it’d be appropriate to outline a foolproof 6-step guide to ensure financial ruin:

A. Hire a Good Friend  or Family Member With No Financial Training to Handle Your Money – Then show your confidence in his or her abilities by giving him or her power of attorney and a 20 percent commission. It’s "important" to keep these unqualified people happy. You don’t want credentialed settlement planners trying to steal away someone with one semester of community college accounting away from your "investment team".

 B. Invest Heavily in Luxury Automobiles – These "almost always go up" in value.

 C. Get an Entourage – They can really help expedite the bankruptcy process.

 D. Don’t Pay Taxes – This way you can blow 100 percent now while waiting for the long-term ramifications of severe, government-issued fines.

E. Don’t Budget – That’s for poor people.

 F. Purchase Exotic Animals - This will make people think you are cool and edgy.  Some athletes have done it and things have worked out great for them.
 

Thank God It's Friday!

Factoring Company Blunder In "Under Seal" Case to Devastating Effect

A factoring company's failure to respect an "under seal" Court order caused unwanted solicitation of a seller's fellow siblings who were victims of sex abuse and were also receiving structured settlement payments as part of the resolution of their lawsuits.

After one of the siblings attempted to sell their structured settlement payment rights to one of the factoring industry's "household names",the other siblings began to receive unwanted solicitations from other factoring companies seeking to buy THEIR structured settlements. Apparently, to some factoring companies  "sniffing" court documents is like "sniffing glue". In my opinion it's like a loaded diaper, it stinks!

 

 

With no laws governing the advertising and solicitation of structured settlement recipients the  potential for abuse of structured settlement recipients continues.

Be sure to watch the debate NASP's Matt Bracy and I had on the subject of factoring licensing and regulation which will air on Legal Broadcast Network.

Connecticut Plaintiff Gets Lawsuit Settlement, Blabs About It, Gets Robbed in Home Invasion

One of the cardinal rules when you receive a settlement is to keep your "pie hole" shut.  If you're not convinced, you may be after reading this story. The Stamford Advocate, hometown newspaper of the structured settlement watchdog, reports that a plaintiff's loose lips apparently led to the barrel of a gun stuffed in his mouth and  being  beaten as three masked gunmen invaded his home in the middle of the night and fled with a "substantial" amount of cash. 

According to the April 19, 2011 story in the Stamford Advocate " Stamford police Capt. Richard Conklin said the victim had recently been awarded an undisclosed amount of money after winning a civil lawsuit. Conklin said the victim told police that he had mentioned his settlement to friends and associates and word got around that he had kept some of his settlement in the house.  (emphasis added)

The purported statistic is that 90% of tort victims blow their awards within 5 years. The anecdotal evidence supporting the alleged statistic, clearly takes a shift on this news.

Plaintiffs, if you receive a settlement don't tell the world. Restrict the information to those who absolutely need to know. You likely suffered pain, or the loss of a loved one, or the loss of your livelihood, to obtain the settlement or award. It's a private matter. And don't keep a substantial amount of cash at your home in these economic times.

Read more: http://www.stamfordadvocate.com/policereports/article/Stamford-police-investigate-Cove-home-invasion-1343001.php#ixzz1Kpl3EUG0

Qualified Assignments: Is Your Advisor Balancing Convenience at Expense of Privacy?

Have you seen "All Payees In One" qualified assignment documents with more than one payee listed on the contract? WE HAVE!

For what is apparently, solely for the sake of convenience, some structured settlement planners are pushing "all payee in one" qualified assignment documents. Who benefits, and why? Let's take a look...

Benefits to the broker or settlement planner

Convenient, "one size fits all" theory

Benefits to the Annuity Issuer

Convenient, Less documents to review

Benefits to Releasor

Fewer documents to sign  (Ever been to a real estate closing? If so, you know what I'm talking about)

Benefits to Payee (of an "All Payee In One" single qualified assignment with multiple payees with separate benefits)

    

NONE   

What Are the Consequences to each Payee on whose back

the benefit of "convenience" falls

when an "All Payee in One" Qualified Assignment is used?

• Every Payee knows every other Payee's Business.
• There is no guarantee that the Payees (or their siblings,  current and future spouses, parents, children) will get along with each other for the time period of their structured settlement, which could stretch 10, 20, 30 or more years into the future.
• If you have 6 children and a surviving spouse receiving structures and one subsequently decides to sell their payments to a factoring company, the factoring company will require a copy of the qualified assignment and other settlement documents as part of the transaction. This means that the other 6 Payees names are potentially going to be part of a public Court record if and when the structured settlement factoring transaction is approved.
• Some annuity issuers even require an address for each payee in the signature block on the qualified assignment even though such information is not in the settlement agreement. It's a free lead for the factoring company, or "svengali" and has the potential to lead to an unwanted solicitation.  Don't be surprised to see the information festering the database of the factoring company for too long.
• The other day  I received an email from a very prominent industry colleague with subject line "Factoring mystery". The attorney received an unwanted unsolicited pitch from a factoring company with knowledge of his deals, even though the settlements were private and not Court filed. The colleague speculated that that the only way they could have gotten the info was through a broker selling it (but that's a whole OTHER issue).  Perhaps I've uncovered another possibility.

 

 

 

 

Fitch Upgrades AIG Life Subsidiaries Citing "Improved Financial Profile"

Good news for AIG structured settlement annuitants.

Fitch Ratings has upgraded the Insurer Financial Strength (IFS) ratings of American
International Group, Inc.'s domestic life insurance subsidiaries known as SunAmerica Financial Group to 'A' from 'A-'. The Outlook for all ratings is Stable.

Fitch states "The rating action of April 25, 2011 follows a review of SunAmerica Financial Group's recent financial results. The upgrade reflects the company's improved financial profile as evidenced by higher operating earnings, reduced investment losses, lower surrender experience, and higher capital adequacy metrics. Overall, this operation has stabilized from the significant adverse effects of the financial crisis and AIG's unique place in it."  Highly significant! "The IFS rating is a stand-alone rating and does not reflect any uplift for U.S. Treasury ownership".  (emphasis added)

Members of AIG's Sun America Financial Group include the following current structured settlement annuity issuers: American General Life Insurance Company and United States Life Insurance Company In The City of New York; as well as former structured annuity issuers: Variable Annuity Life Insurance Company and Western National Life Insurance Company. AGC Life Insurance Company, an upstream holding company to American General  Life which guarantees the performance of the qualified assigmnment company that purchases American General Life annuities as an IRC 130(d) "qualified funding asset" was also upgraded/

Other AIG-related ratings such, as Chartis Insurance, were not affected by this action.

 

Unfortunately those structured settlement annuitants who panicked and sold their structured settlement payment rights may regret their decisions.

 

Perhaps the predatory "vultures" from Woodbridge Investments, LLC, who issued a press release soliciting AIG annuitants on September 18, 2008, can sleep a little easier tonight knowing that their "hoard" is deemed safer. 

Read the full Fitch press release on the AIG upgrade Download FitchRatingUpgrade20110425

 

New York Structured Settlements: NSSTA Opposes Effort to Beef Up Plaintiff Rights

The National Structured Settlements Trade Association, the trade association of the structured
settlement industry primary market, has announced that it strongly opposes A3786 and S4306, a  bill whose motivation to enhance the New York Structured Settlement Protection Act appears to target three key areas:

1. Making sure that plaintiffs and plaintiff attorneys are aware that they can have their own representation in the transaction and the manner in which they should be informed. If enacted S4306 would require that a claimant receive written notice of the claimant's right to secure a claimant's structured settlement broker to represent the claimant during the acquisition of the defendant's settlement funding mechanism, including an annuity. 
2. A tacit focus on a certain claims office of a particular insurer which has stubbornly protected its structured settlement brokers by purportedly forbidding them, from splitting commissions with any broker representing the plaintiff, This has been a thorny issue for plaintiff lawyers who want expertise for themselves and their clients and feel that the cost of such services should come out of the annuity commissions earned from the placement of structured annuities. It should be pointed out that the overwhelming majority of structured settlement transactions occurring in New York and elsewhere today, are civil matters concluded with experts representing both sides.
3. Busting approved lists of annuity issuers that casualty insurers create for use when their claims are resolved by way of structured settlements.Some lists are broad, others are very narrow. Some ar logical, like restricting to companies with minimum rating criteria, business philosophy, underwriting standards and long term commitment to the market. Still others appear to be all about driving business to an affiliate. Others make little sense at all.

The executive summary that forms part of the National Structured Settlement Trade Association position paper appears immediately below:

•  "Structured settlements have been used to provide long-term financial security to injury
  victims and their families throughout New York State and across the country for
  almost 3 decades.
• The proposed legislation would upset the settlement negotiation process that has been so
  successful in New York. NSSTA contends that the result will be fewer structured settlements for injury victims.
• Under the proposed legislation, if the parties cannot agree on the funding source for the
  periodic payments under the structured settlement “prior to final approval of the settlement
  agreement”, the legislation directs that the plaintiff can choose the funding source. If this
  proposed provision is interpreted to mean that after the settlement agreement is finalized, the
  plaintiff would have the unilateral ability to impose the funding source on the defendant
  without regard to cost, thereby effectively dictating the cost of the settlement to the defendant,
  the defendant will have little interest in participating in the structured settlement in the first
  instance.
• If instead the provision means that the defense simply turns control of the lump sum of cash
  to fund the structured settlement over the plaintiff who then picks the funding source, Federal
  tax risks would be created for the plaintiff".

For a copy of the entire NSSTA memorandum opposing the expansion of the New York Structured Settlement Protection Act (New York General Obligations Law 5-1702 ) please click here Download Nssta-memo-new-york- structured-settlement-plaintiffs-rights-bill-3786-4306_0[1]

On April 6, 2011 the structured settlement watchdog, John Darer, emailed NSSTA leadership and copied several heads of agencies after receiving a copy of communication dated June 8, 2010, from NSSTA counsel to representatives of 3 broker firms  (SFA, Ringler and EPS) and one life insurance company executive about the bill which said that the Life Insurers Council of New York was suspicious of the bill and asked for NSSTA's advice. While we've subsequently learned that NSSTA did provide advice to LICONY and LICONY has acted on that advice and opposed the bill. Following is a copy of the email to which NSSTA did not issue a response other than the above linked memorandum distributed to its membership which was attached to an email newsletter.

 "Mike/Eric,

 

 

I have received a copy of the aforementioned bill that appears to have been reintroduced in January 27,2011. Appended to the copy is an email bearing a date of 6/8/2010 from (NSSTA attorney) John Stanton to certain but not all of the NSSTA Board members (Mike Kelly, Len Blonder, Dan Durbin, John Machir, and Eric)   (emphasis added)

 

The email indicates that (NSSTA attorney) Craig (Ullman) received it from someone at LICONY (LIGCONY?) and went on to say that LICONY was suspicious of the bill and may be inclined to oppose it. Craig told her that "we would let her know NSSTA's views".  (emphasis added)

 

 

NSSTA purports to serve all sectors of the industry.

"Since 1985, the National Structured Settlements Trade Association has been the leading voice of the structured settlement industry". (emphasis added)

Questions

 

1. The obvious question is why the full board was not notified in the subject email?

 

2. Why were representatives of only three defense firms copied? Why not all of them? Why not any other company heads?

3. Was LICONY ever apprised of NSSTA's views? If yes, please describe the process that was used to compile "NSSTA's views"  If, no when will NSSTA provide its views to LICONY? Please describe the process that will be used  to compile "NSSTA''s views"?

 

I spoke to a principal at one of our member firms and there was no knowledge of this bill or having been canvassed by NSSTA for consensus. Unfortunately I suspect there is more of the same.

 

It is critical for credibility that our association maintain transparency in its dealings, particularly on sensitive issues such as the subject matter of this bill. Broker relations are markedly improved from a decade ago. Let's not return to the old days (except for higher interest rates).

 

Please respond

 

Thanks and best regards,

 

 John D. Darer, CLU ChFC CSSC RSP 
4structures.com, LLC
We Know Settlement Planning®
43 Harbor Drive, # 309
Stamford, CT 06902
USA"

 

Last year current New York Attorney General Eric Schneiderman introduced S8072A which is similar to the newer bill. Here is my commentary from July 2, 2010 Plaintiff Structured Settlements New Rights In New York Senate Bill S8072A? My opinion has not changed since I wrote the post.

 

 

Watch my video on New York General Obligations Law 5 1702 which was shot in January 2011.

SEC Expands the CFP Board of Standards' power to discipline Financial Advisors

The Securities and Exchange Commission has expanded the CFP Board of Standards' power to discipline advisors now that it has made it clear that Registered Investment Advisers (RIA) and broker-dealers can provide client information to the board without violating a privacy rule and facing an SEC enforcement action.

Advisors often have cited Regulation S-P, a federal privacy rule, as the reason they could not share client information with the CFB Board of Standards concerning a customer complaint. SEC has now sent the  CFP Board a "No Action" letter that says the SEC staff will not bring an enforcement action against a broker-dealer or registered investment advisors that shares non-public personal customer information with CFP Board. While Regulation S-P is intended to protect the privacy rights of customers, the No Action letter acknowledges that protecting the public from criminal and improper conduct is paramount to ensuring investor confidence, the Board says.

A number of participants in the structured settlement industry are CFPs or financial advisors and a number of structured settlement brokers , settlement planners and firms have relationships with financial planners and advisors. Perhaps the expanded  power of the CFP Board will impact sectors of the structured settlement industry. As has been documented here over the years,  despite having a published code of ethics, unfortunately, the National Structured Settlement Trade Association (NSSTA), which awards the Certified Structured Settlement Consultant designation, has historically failed to enforce its own code of ethics.

Can You Get "Full Value" If You Sell Your Structured Settlement Payments?

One factoring company suggests that "it was almost impossible to help (a selling structured settlement annuitant) receive full value" (for their structured settlement payment rights). The statement implies that IT IS possible for a selling structured settlement annuitant to receive full value. 

Let's make one thing clear. A selling structured settlment annuitant will NEVER receive "full value", unless they DO NOT SELL their structured settlement payments.  The structured settlement payment rights are first reduced to "present value" and a percentage of that "present value" is paid , subject to Court approval. No matter how competitive the amount of cash a factoring company is willing to offer you now, remember that you will never receive "full value".

 

Settlement Professionals' "Associatons", "Affilations", and Afflictons

To demonstrate Jack Meligan's "selfless nature"  Settlement Professionals, Inc.'s creative web designers have apparently and ingeniously omitted the letter "I" from two key words on the SPI web page discussion of how it is a pioneer in the industry**. Perhaps this sort of "brilliant strategic thinking" was conjured up while they were at altitude with their crampons and petons until developing an "afflicton" to their neurons  which led to a crash on a futon and the material "omisson".  What you think Mama San?
** as of April 21, 2011 @ 11pm EDT.

The Structured Settlement "Friendly": Best Interest of Your Client?

The use of the term "friendly" to describe structured settlement representation that has been "rigged" so that two related companies under the same holding company can work the case from adverse positions has met with some consternation in some corners of the structured settlement industry. In theory, the holding company wins because it pockets all the commission revenue from both sides and the insurer wins because some "free radical" settlement consultant  for the plaintiff will not upset the "karma" of the settlement process. But does the plaintiff win?  Maybe , maybe not, in my opinion.

Now as we understand from our sources, perhaps in response to the encouragement that we and others have made to shop around, Peachtree and J.G. Wentworth are playing ping pong with each other when it comes to would be sellers of structured settlement payment rights. This presents some issues:

1. A story emerged recently that the two companies are in the process of merging.

2. Peachtree is not known for offering competitive discount rates. A transaction I reviewed recently for a seller carried a 20.62% discount rate. Nothing unusual for them. From a visual standpoint, the big advertiser reminds of a snake in a cave feeding on the mass exodus of bats. Cue video...

3. J.G. Wentworth is not known for giving a good rate right off the ah... bat. It will compete if it has to.

4. The obvious questions to be raised, in my opinion, are whether adequate disclosures are being made about the relationship between the two "friendly" companies and whether or not there really is " competitive bidding"?

Perhaps one can draw a lesson from soccer, where "friendlies" are practice games that don't mean much