Worth Financial Group Inc. and Life Settlement Contracts

We are currently investigating allegations made against Worth Financial Group, Inc., a Dallas, Texas-based securities brokerage firm.  FINRA (the Financial Industry Regulatory Authority) brought a regulatory action against Worth Financial Group, alleging that it failed to establish and maintain an adequate supervisory system regarding the sales of life settlement contracts sold by Life Partners, Inc. (LPI).  Worth Financial Group consented to a censure and a $10,000 fine to settle the claims brought by FINRA.

With a life settlement contract, an insured can sell their life insurance policy on a secondary market to investors at a discount.  The insured sells their policy to an intermediary like Life Partners, Inc., who then divides these policies into fractional interests, which then get sold to investors.  The insured then gets immediate funds while they are still alive, and the investor will get the death benefit after the insured passes away.

While these can be viable investment options, FINRA (and its predecessor the NASD) has long been concerned about life settlement contracts, including concerns about whether life settlement contracts are suitable for the particular investor, to ensure that adequate due diligence is performed, and to ensure that advisors are adequately supervised when selling these complex and risky investments.  See NASD Notice to Members 06-38 and FINRA Regulatory Notice 09-42.  NASAA (the North American Securities Administrators Association) has also expressed concerns regarding the significant risks posed by fraud and abuse in connection with life settlement sales.  See http://www.nasaa.org/5315/state-securities-regulators-continue-to-see-fraud-and-abuse-in-the-life-settlement-market/ (last visited Jan. 11, 2015).

Worth Financial was alleged to have sold LPI life settlement contracts from July 2008 to April 2011.  Worth was a “licensee” of LPI, and then sales representatives could sell LPI investments through Worth.  Six of Worth Financial Group’s representatives had licenses to sell LP products through it, and other 21 non-affiliated sellers had licenses through Worth.  Because of its status, Worth earned .5% to 2.0% of an override commission on all sales made through its license.  FINRA alleged that Worth Financial failed to supervise the non-affiliated licensees who sold LPI products through it.

If you have lost money in life settlement contracts or Worth Financial Group want to hear about ALL legal options, please visit https://www.israelsneuman.com/ and go to our CONTACT page or call us at 720-599-3505.

Click here to view FINRA AWC:  Worth FINRA AWC