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June 04, 2015

Posed as Settlement Advisors but "Had Little to No Training" Says SEC

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 last 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?

Posted at 09:53 AM in Investing in Structured Settlements, Structured Settlement Factoring News, Structured Settlement Investments, Structured Settlement Payment Rights, Structured Settlement Transfers, Structured Settlement Watchdog® |

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Guide to Structured Settlements 2024

  • What is a Structured Settlement? What You Need to Know
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  • Treasury Funded Structured Settlements
    Treasury Funded Structured Settlements are a settlement option for the most conservative using the OTHER permissible qualified funding asset under IRC 130(d), United States Treasury Bonds in addition to, or instead of, structured settlement annuities. Treasury Funded Structured Settlements can also be used to fund installment sales, also known as structured sales and other non qualified structured settlements.
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    Ways You Can Structure Your Settlement Payments in 2024. With a structured settlement you can have more than one type of payment in a single contract. Different types of structured settlement payments can be customized and combined to meet your needs on a stand-alone basis, or in conjunction with other financial products. Diversify your structured settlement, if you wish, by funding with more than one annuity issuer, with treasury funded structured settlements, index linked structured settlement payments and market based structured .
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  • Structured Settlement Quote Lock-Ins | What You Need To Know
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  • What Are Structured Settlement Annuities?
    Structured settlement annuities are annuities that can provide one or more customized annuity payment streams in a single contract. Read about structured settlement annuities here.
  • History of Structured Settlements
    Tracing the roots of structured settlements history from 1918, when Congress exempted damages for personal injury or sickness from income tax, to the establishment of structured settlements as a core personal injury settlement planning tool to the present day.
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Qualified Settlement Funds

  • What is a Qualified Settlement Fund?
    Qualified Settlement Funds | What You Need to Know
  • Firmwide Qualified Settlement Funds Debunked
    Firmwide qualified settlement funds have been heavily promoted to trial lawyers, but have been debunked in a detailed analysis in a July 2022 legal opinion a tax partner at the law firm of Faegre Drinker Biddle & Reath, LLP. Trial lawyers and firms who have established Firmwide QSFs or coinsidering establishing a Firmwide QSF should read the analysis as part of their evaluation.

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Structured Settlement Best Practices Corner

  • New York Insurance Advertising law requires the full name of the Insurer to be listed along with the city and state of the principal office. Stating that you represent these fine companies using Insurance company logos without the preceding information are also illegal
  • When it comes to settlement documents it is the ultimate responsibility of the lawyers or claims adjusters who receive input concerning the structured settlement aspects of the documents to actually read the entire document, exercise independent thought and advise their clients properly
  • Be aware that financial advisors use of testimonials is prohibited or restricted
  • Most states require that Testimonials represent the CURRENT opinion of the person who made the testimonial. Be prepared to back it up.
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