by John Darer® CLU ChFC MSSC RSP CLTC
One of the drawbacks of the absent regulation of salespeople and sales practices in the structured settlement secondary market is that there is no suitability standard, no best interest standard and no fiduciary standard. Unlicensed salespeople lacking credentials are dispensing often very poor financial advice and people are getting hurt.
Furthermore, there is reason to believe that African-Americans and other minorities are being singled out and targeted for exploitation. Here are some examples:
- A young unemployable 29 year old African American father of two toddlers is advised to sell his entire structured settlement and primary source of support for his family and put it into mutual funds. Approved by a Florida judge. He had an Allstate annuity that had a better discount rate than the settlement purchaser offered as well. Fortunately this was nipped in the bud quickly and a negotiated rescission saw him restored. (NASP member)
- A 20 year old African American from New York is forum shopped into Florida and fleeced by predators in the secondary market who were not acting in ccc
his best interest. (NASP member)
- Another young 19 year old African American is forum shopped into Florida and completely hosed out of his structured settlement. The factoring company sales rep colluded with a pal in the real estate industry and placed the young man into highly risky losing real estate positions that would not pass the smell test. (NASP member)
- According to a legal complaint, a West Virginia young African-American man is told by a South Florida sales rep makes claims about investment performance that would violate securities laws (NASP member)
- A Brooklyn NY 20 year old African American Allstate annuitant from New York was financially smoked by a Florida company
What is also tragedy in the making is that the "pimps" who originate these deals, grab their vig, sell off the acquisition, and the deals then find their way to investors, including potentially, retirees and other injury victims using the secondary market annuities scam label.
These are just some examples. Add these to the Baltimore City scam allegedly perpetrated by Access Funding, its bribe taking lawyer Anuj Sud, Rockville MD lawyer Charles E Smith who allegedly advised an illiterate, intellectually disabled young woman on the sale of a structured settlement (designed to protect her throughout her lifetime) for a small and severely discounted amount of cash, without meeting her or providing counsel on the potential consequences of selling the structured settlement payments.
The road to recovery is difficult. Few attorneys have the sophistication and nous to prosecute cases against settlement purchasers. The rules need to change and there are good public policy reasons for doing so, in my opinion.