by John Darer CLU ChFC MSSC CeFT RSP CLTC
According to our sources there are MULTIPLE settlement planners who have bought and are buying their clients' structured settlement payment rights. And it's not just a one off thing, there are even repeat sales!
- These settlement planners hold insurance licenses and appointments with life insurance companies that issue structured settlement annuities.
- Apparently the settlement planners/appointed agents are buying their clients' rights to receive payments from structured settlements funded with the very same life insurance companies' annuities, for pennies on the dollar, that the settlement planner placed. One or more life insurance companies are aware of this.
- One settlement planner uses a factoring company in an apparent attempt to disguise the transaction. The factoring complain originates the deal with the settlement planner's client and then sells it to the settlement planner while grabbing some vig on the way through.
Is there a Conflict of Interest?
- Is there a conflict of interest in buying your own client's structured settlement payments?
- Is the conflict of interest eliminated by the use of an intermediary to do the factoring sell side of the transaction, where the intermediary who referred the deal by the settlement planner, is the only buyer? For a parallel, consider the Bourque case, where a Houston personal injury lawyer attempted to buy his client's structure via a a Puerto Rico company he controlled that was established shortly have the structured settlement was established at a horrible discount rate.
- Is the conflict of interest eliminated by the use of an intermediary where the intermediary bids out the deal to multiple protective buyers and the settlement planner holds the winning bid?
- Was the pennies on the dollars return in exchange for the sale of payment rights better or worse than the seller of could receive in the open market by shopping from multiple sources? Say for example the settlement planner's deal in involved a discount rate to the seller if 7% when 5% or lower was possible? The lower discount rate benefits the seller, while the high discount rate benefits the buyer.
- How does a settlement planner's activity in this area jive with the ethics of the professional settlement planning association to which he or she belongs?
- Does the settlement planner's activity conflict with the terms of appointment with the annuity issuer?
- Does the settlement planner's activity conflict with the local rules of the Court that approved the settlement (if the payee was a minor at the time the structured settlement was established? [e.g. in Bronx County New York City, as part of the moving papers submitted to seek approval of a minor's structured settlement, the structure broker must make certain representations under penalty of perjury concerning factoring an distribution of any information to factoring companies ]
As further details emerge I will bring them to you.