Category Archives: Viatical Settlements

Dallas Based Worth Financial Group Sanctioned by Securities Regulator

January 9, 2015

Worth Financial Group  entered into a Letter of Acceptance, Waiver and Consent  (AWC) with the Financial Industry Regulatory Authority (FINRA) to resolve allegations that  it failed to establish adequate supervisory systems and written supervisory procedures to supervise sales of life settlement investments by the firm’s registered representatives and non-associated individuals for whom the firm received override commissions.

FINRA alleged that from July 2008 to April 2011 Worth sold fractional interests in life settlements issued by Life Partners, Inc., and collected override commissions on those sales.

Worth Financial Group was censured and fined $10,000.

FINRA Case # 2011025625101

Worth Financial Group has been registered with FINRA since 1983 and is headquartered in Dallas, Texas.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Waco Based Life Partners Holdings, Inc.–Future Uncertain

December 22, 2014-Waco, Texas

Life Partners Holdings, Inc. , the Waco company that has been a pioneer in selling interests  in life insurance policies on the  lives of third parties to investors (also known as a “viatical settlement”) was recently ordered to pay $15 million in illegal profits and penalties of $23.7 million, by U.S. District Court Judge James Nowlin. In his ruling, Nowlin noted that the company has “at best a casual attitude” toward securities laws.

In a recent SEC action, Brian Pardo, CEO and founder was hit with a civil penalty of $6.2 million and general counsel and secretary of Life Partners Holdings, R. Scott Peden was ordered to pay a penalty of $2 million.

Business Model of Life Partners Viatical Settlements

The investment model is relatively simple. Using money raised from investors, Life Partners buys the rights to the proceeds of a life insurance policy from an individual who is generally elderly and/or ill, by paying something less than the death benefits of the policy, and the investor agrees to continue making the premium payments until the person dies. Upon death, the investor receives a portion of the insurance proceeds, less fees.

For example, consider the situation described in the Wall Street Journal in a 12/21/2010 article. In summer of 2005, Life Partners investors bought a $2 million policy on the life of Marvin Aslett, who was then 79. At the time the investors were told that he had 2 to 4 years to live. Had he died during as projected at the time the policy was purchased, investors would have realized a tidy return. Unfortunately for the investors,  (and of course fortunate for Aslett and his beloved family) at the time of the WSJ article, Aslett was  alive and well at age 84 , while the investors in the policy were  paying premiums .

Life Expectancies Routinely Underestimated

Obviously if the person on whose life the policy is written dies sooner than projected life expectancy, the investors realize a more favorable return since they pay less in annual premiums and reach payout quicker. This makes the accuracy of the prediction of the longevity of the insured (the actuarial prediction) extremely important.

According to the WSJ article, as well as the allegations in Stone, et al v Pardo, Life Partners, et al pending in the Western District of Texas, those life expectancies are provided to Life Partners by a single person, Dr. Donald T. Cassidy, of Reno Nevada, who is paid a monthly retainer of $15,000, plus $500 for every life policy he assesses.

The allegations are that Cassidy’s life expectancy calculations regularly conclude a life expectancy substantially shorter than the longevity projected by independent firms, a factor that works in favor of Life Partners since it results in a quicker payout, fewer premiums to pay and a greater return to the investor, making it much easier to sell. The Stone case alleges that Cassidy’s predictions are routinely inaccurate in favor of the company and cite a  study in which 283 of 297 policies the insured outlived Cassidy’s predictions, sometimes by as much as twice as long. Thirty-four percent lived triple the estimate of Cassidy per the Stone complaint.

Recourse for Investors

If you invested in Life Partners on the recommendation of your broker or broker dealer or a registered investment advisor you may be able to recover damages. Financial professionals have a duty to perform due diligence on the products they sell and to make recommendations that are suitable given the age, health and level of financial sophistication of the investor. Call to discuss your rights with an experienced securities attorney.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870