by John Darer
At the NSSTA hospitality suite in Las Vegas Thursday night November 11, 2010, I couldn't believe that I actually heard that a member of the NSSTA Board of Directors believes that the NSSTA apparent embellishment of a judge's mischaracterization of a discount rate "is defensible".
The "play-by-play" on the NSSTA blog (at time of this writing) reads like this:
"That’s New York Judge Norma Ruiz of the Supreme Court (Bronx County) in a decision this month describing a proposed contract that that a structured settlement factoring company tried to get an accident victim to sign. The judge cited the contract's effective annual interest rate as being 71.40 percent.
According to the Judge, the proposed reduction in payment to the accident victim was “at a rate is more than double that which banks are currently charging and more than even the steepest credit card rates of 29%.”
In her commentary denying a factoring petition, Judge Ruiz divided the purchase price by a lump sum which equaled the sum of 60 future periodic payments, which sum was mischaracterized by the Judge as "discounted present value" to arrive at what she erred in referring to as " a final discount rate". By her commentary, Judge Ruiz then displayed her intention to compare the errant rate to annual interest rates charged by credit card companies. It was apples and oranges at that point. The error made the difference highly dramatic, but the comparison not reasonable. As we stated in the first post linked below, the Judge's statement was inconsistent with the facts presented by her earlier in her decision.
WHY did the NSSTA THEN choose to (1) mislabel and (2) mischaracterize Judge Ruiz label of "final discount rate" as an "effective annual discount rate" -words that Judge Ruiz DID NOT use. If you follow the second linked post to a copy of Judge's decision (see page 5 of 8) you will see the evidence of what the Judge actually said. The NSSTA could very easily have chosen to correct the Judge's statement, but chose not to. It would still have made a powerful statement. Peachtree is known for high discount rates. Why? Was this B.S. supposed to help sell more structured settlements?
The NSSTA, and each of its Board of Directors, has been put on notice that their published statement is not correct. It will be interesting to see how long the NSSTA Board of Directors chooses to give direct or tacit authority the misleading statement to be posted on its website. In the meantime members of the NSSTA should pause to reflect on the NSSTA Code of Ethics and how the aforementioned misinformation disseminated by the association affects their credibilty.