The Securities Law Firm of Klayman & Toskes ("K&T"), www.nasd-law.com, announced today that it is investigating the sales practices of Financial Industry Regulatory Authority ("FINRA") brokerage firms that sold life settlements issued by Life Partners Holdings (NasdaqGS: LPHI), as well as the due diligence performed by these firms before approving these products for sale to their customers. We believe that the sale of these products was unsuitable for investors, and the risks associated with life settlements were not fully disclosed. FINRA has specifically addressed the sale of life settlements in various Notices to its members. Specifically, FINRA has reminded brokerage firms that:
- variable life settlements are securities transactions that are subject to the federal securities laws and all applicable FINRA rules;
- if they seek to enter the business of variable life settlements, they must file an application for approval of this material change in business under NASD Rule 1017;
- they must present balanced and fair information in their advertising and other communications with the public and customers about variable life settlements and related products, and otherwise comply with all aspects of NASD Rule 2210; and
- they must adhere to suitability obligations under NASD Rule 2310; fair and reasonable commissions under FINRA Rule 2010 (formerly NASD Rule 2110), NASD Rule 2440 and related guidance; and fair fees and the disclosure of fees under NASD Rule 2430.
K&T believes that brokerage firms may have violated FINRA Rules in connection with the sale of life settlements issued by Life Partners Holdings. As such, K&T is investigating potential claims on behalf of investors who purchased life settlements from FINRA broker-dealers. Investors should avail themselves of all remedies in attempting to recover their losses, including filing a securities arbitration claim against their brokerage firm.
In February 2011, a class action lawsuit, Case No. 11 CV 00027, was filed against Life Partners Holdings in the United States District Court, Western District of Texas. The Complaint alleges that "Life Partners Holdings failed to disclose to investors that it was shortening the estimated life expectancies of insured individuals. As a result, the Company was making the policies covering these individuals more attractive to potential investors, as the potential 'payout' from the policies maturing (when the insureds died) would occur in a shorter period of time." It is also alleged that "had the Company used accurate and appropriate estimated life spans, Life Partners Holdings would not have been able to sell as many policies to investors and earn the additional and increased transaction fees for these insurance policies."
Earlier this month, on May 9, 2011, Life Partners Holdings disclosed that it had received a Wells Notice from the SEC stating that its staff recommended that a civil injunctive action be brought against Life Partners Holdings, as well as two of the company's directors and executive officers, for potential violations of securities laws. The primary basis for the proposed civil action relates to knowledge and disclosures about the accuracy of the estimated life expectancies for the policy insureds of the life settlements.
The attorneys at K&T are dedicated to aggressively pursuing claims on behalf of investors who have suffered investment losses. K&T, an experienced, qualified and nationally recognized securities litigation law firm, practices exclusively in the field of securities arbitration and litigation. It continues its representation of investors throughout the world in securities arbitration and litigation matters against major Wall Street brokerage firms.
If you have experienced substantial losses as a result of investing in life settlements and you wish to discuss your legal options at no obligation, please contact Steven D. Toskes, Esquire or Jahan K. Manasseh, Esquire of Klayman & Toskes, P.A., at 888-997-9956, or visit us on the web at http://www.nasd-law.com
Contacts:
Klayman & Toskes, P.A.
Steven D. Toskes, Esquire or Jahan K.
Manasseh, Esquire, 888-997-9956
http://www.nasd-law.com