In recent years, many investors have been looking for new ways to invest. One way funds have been doing that is by pooling a type of asset or debt into an investment fund. Ownership of the pool is sold as shares, with profits to be allocated between the shareholders if the pool’s assets increase in value. One such category of these pooled asset investments is “life settlement funds,” but the Securities and Exchange Commission (SEC) and others are warning that many of these funds are a scam.
In a life settlement fund, an investment company is purchasing life insurance policies from the elderly. The company pays out a lump sum to an insured person in exchange for being named the person’s beneficiary. The company collects a number of these policies into a fund, then it sells shares of the fund to investors.
In theory, the fund investors will receive the life insurance payouts when the insured people die. And whenever the eventual payout exceeds the lump sum paid, the investors expect to receive a profit.
As an enticement for investors, some companies have even offered “life expectancy guarantee bonds,” which will pay out if an insured person hasn’t died by a specified date in time.
However, experts warn that both the seniors selling their policies and the potential investors are at risk.
Seniors may not understand the terms of the sale (such as undisclosed high transaction costs or tax implications). And investors need to realize that these are high-risk investments. Life insurance payouts are not guaranteed. There are many reasons why the beneficiary might not receive a dime. (And at the same time, some companies fail to pay those “guaranteed” bonds.)
Silver Law Group represents investors in claims for losses relating to life settlement funds. Amongst other cases, our attorneys represent investors in GWG L Bonds, Seeman Holtz, and Medical Capital. These complex cases require experienced counsel who understands these offerings and can help recover damages. At times, fraudulent actions can be covered up for years. We work with SEC whistleblowers to uncover and report the misconduct in the creation and sale of life settlement funds.
Life Settlement SEC Whistleblower Attorneys
If you are aware of a firm that is misleading either seniors or investors on these funds, and you’re considering becoming an SEC whistleblower, or need help recovering your funds, contact the experienced attorneys at Silver Law Group and the Law Firm of David R. Chase. With years of experience in securities fraud and SEC whistleblowing litigation, we are here to help. For a free, confidential consultation, contact us or call us today at (800) 975-4345.