by Structured Settlement Watchdog®
The prosecution of a case against a Texas retirement planning firm is a torpedo across the bow for those who are peddling structured settlement payment rights as annuities.
Last month the Securities and Exchange Commission(SEC) Monday said that it had charged a retirement planning firm and its principals who host a financial radio show with falsely telling investors that interests in life settlements they offered and sold were “guaranteed,” “safe as CDs” and “federally insured.”
The complaint, filed in the U.S. District Court for the Northern District of Texas against Novers Financial and its principals Christopher A. Novinger and Brady J. Speers states that while Novinger and Speers marketed themselves as “The Low Risk, Safe Money Guys,” they "possess little to no training relating to securities and non-insurance related financial products, including life settlements," and that they "have repeatedly been sanctioned by regulatory authorities," including the Oklahoma Department of Securities. The SEC alleged that between 2012 to 2014, they sold approximately $4.3 million in life settlement interests to 26 investors and between them pocketed over $510,000 in commissions
The SEC also alleges that they used a bogus “net worth calculator” that improperly qualified some prospective investors for purchases by including income that investors hadn’t received, such as future pension and Social Security benefits.
A spokesperson for the Fort Worth office of the SEC stated “No matter what a salesperson tells you, interests in life settlements are never guaranteed, risk-free or federally insured", according to an article published alst month in Think Advisor.
Typically life settlement can only be sold to investors who meet certain income or net-worth levels. The SEC alleges that the Defendants manipulated the numbers using a bogus calculator to artificially inflate assets so the investor would "qualify"
In addition to the charges against Novers Financial, Novinger and Speers, the SEC charged ICAN Investment Group LLC and Speers Financial Group LLC for acting as unregistered broker-dealers. The SEC seeks injunctive relief, return of allegedly ill-gotten gains with interest, and financial penalties.
Implications for Structured Settlement Secondary Market?
In 2013 and 2014 before being torpedoed by several of our blogs, a Massachusetts company called SHP Financial was marketing structured settlement payment rights through Twitter, falsely advertising that structured settlement payment rights were just like a CD, even making unauthorized use of insurance company logos and trademarks. to enhance its deceptive marketing ploy.
A number of other companies who sell structured settlement payment rights to investors mislead investors by mislabeling the structured settlement payment rights as annuities. Such mislabeling implies licensing, credentials and regulatory oversight that does not exist for the secondary marketplace and is false.
When are legislators and regulators going to wake up on the structured settlement secondary market and start making the process safer for annuitants and investors?