by John Darer® CLU ChFC MSSC RSP CLTC
No FINRA license is required to sell Treasury Funded Structured Settlements. The TFSS Trust program is not a sale of a security or investment that would be subject to direct SEC regulation, says its promoters. Trust companies are regulated by a number of entities and are permitted to pay referral fees for business in accordance with those banking regulations. As long as the structured settlement broker or settlement planner uses the materials provided by the trust company and adheres to their business practices in providing approved proposals/illustrations, then no securities license would be required.
If a structured settlement broker or settlement planner were to discuss with the settling parties individual investments such as mutual funds, variable annuities, variable life, stocks, bonds (and other regulated investments) and make recommendations as to performance, then those activities would require a securities license under FINRA.
Obligations of the United States Treasury are a permissible "qualified funding asset" under Internal Revenue Code Section 130(d). If a Treasury Funded Structured Settlement is used to fund damages that qualify as physical injury, physical sickness, wrongful death or workers compensation (falling within the guidelines of IRC 104(a)(1) or IRC 104(a)(2), the resulting payments are income tax free.
Treasury Funded Structured Settlements may also be used for tax deferral in employment cases, structured attorney fees, divorce cases, D&O liability, and other legal matters where damages are taxable, through the TFSS International program, using a non qualified assignment.