by Structured Settlement Watchdog®
Are companies that sold investors structured settlement derivatives using the scam label " secondary market annuities" to blame for real life financial consequences to state insurance coffers, as investors complain to regulators when insurers stop payments due to contested or competing claims? The regulators then contact the insurers for a "what's up?", according to our sources.
The fact that structured settlement derivative investors are contacting state insurance regulators, possibly with the coaching of the secondary market annuity scam labeler, coupled with the subsequent contact of insurers by regulators, draws the inevitable conclusion that buyers of structured settlement derivatives did not completely understand what they were buying, thought that they were annuities and may have been misled about what they were buying.
As has been previously reported and documented, promoters of structured settlement derivatives heavily marketed to investors with the "secondary market annuities" scam label, routinely pushed the scam label to hustle their products.
Some structured settlement factoring originators package up acquired payment rights, securitize them and sell them to institutional investors, taking their "vig" along the way. Others directly target individual and possibly less sophisticated investors, mom & pops and retirees. Investors, particularly retirees, who in reliance on the scam label believed they actually bought annuities, annuities being a familiar term associated with safe and secure, a reputation built by billions of ongoing and legacy advertising spent by licensed user fee paying life insurance companies (in some cases for more than one hundred years).
While falsely promoting the financial derivatives as an annuity, a regulated insurance product, some secondary and tertiary market companies also told buyers that state insurance guaranty funds might apply in the event of insolvency, conduct that would be illegal to promote annuities or any life insurance product under state law throughout the land. Some of the principals of such companies held/hold insurances licenses, but perhaps not in every state they sold the secondary market scam labelled derivatives to investors, including retirees and perhaps injury victims.
Promoters of Structured Settlement Derivatives Scam Labelled As Annuities Who Advertise State Insurance Guarantee Associations in their Sales Pitchl
- Annuity Straight Talk LLC, Montana [ via (1) SecondaryMarketAnnuities(dot)Net (2) DCF Exchange LLC (3) smasecureassets (dot)com which is listed as the only sponsor at time of posting]. Annuity Straight Talk not only mentions but uses hypothetical examples of how it would apply.
- Factor Financial, Delaware, actually falsely represents that every insurance company "is regulated by a state guaranty fund"
State insurance departments are funded in large part by fees charged to those who use the system:
- Insurance companies who do business in the state
- Licensed insurance agents, brokers and consultants
- License fees
With few exceptions, structured settlement factoring companies that originate structured settlement factoring transactions, that are ultimately sold to investors directly or through intermediaries, are currently not subject to a license or registration requirement by any regulatory agency state or federal.
As a result, neither structured settlement factoring companies nor anyone discussing (1) structured settlement factoring transactions or (2) investing in structured settlement derivatives with the annuitants or investors, pay any license fees to state insurance regulators. Many do not even register to do business in the states they solicit customers or consummate structured settlement factoring deals. Thus those who profit from the system and tax the system's resources do not pay user fees.
The cat is out of the bag. As more annuitants and former annuitants fight back against structured settlement factoring abuse, they contest and seek to invalidate court orders. Then insurers move for and are successful with interpleaders, or plaintiffs move for a constructive trust (since many unregulated originators have no money), which potentially impacts investors when the payments are suspended.
The system is flawed when the consequence to insurers and ultimately to taxpayers, in states where consumers who have been misled by merchants (for the sake of their own profits), is increased unit costs for state and local regulators to devote time and resources to the scammed investors who turn to them for answers when the payments are halted due to a competing claims to the payments. Payments may be contested if it can be proven that the Court approved transaction did not satisfy the requirements of the structured settlement protection act. These individuals and entities should be taxed up front as a prerequisite to doing business in a state and through ongoing user fees.
The promoters often tout that "each deal is vetted and approved by outside counsel", but even that is no guarantee as investors in what turned out to be Access Funding related derivatives have shown [ Read my recent story about the Florida retirees] New York Life is moving for interpleader in the Terrence Taylor case and a class action in Virginia threatens investors.