Life Partners Sued by SEC for Fraud in Life Settlement Deals - Businessweek
Jan. 4 (Bloomberg) -- Life Partners Holdings Inc. and three top executives are facing U.S. regulatory claims that they defrauded shareholders by systematically understating risk related to the firm’s purchases of life insurance policies.
Shares of Waco, Texas-based Life Partners opened at $4.07, 36 percent below yesterday’s close, after the Securities and Exchange Commission said Chairman and Chief Executive Officer Brian D. Pardo, President and General Counsel R. Scott Peden and Chief Financial Officer David M. Martin participated in a scheme that misled investors about the firm’s profit potential.
“The senior-most executives at Life Partners concealed significant risks to the business, manipulated financial statements with improper accounting, and knowingly profited from their misconduct by executing insider trades based on information that was not available to the public,” David Woodcock, director of the SEC’s Fort Worth Regional Office, said in a statement yesterday.
The company, which buys rights to death benefits from policyholders in exchange for lump-sum payments, knowingly underestimated life expectancies used in transactions from 2007 to 2011, the SEC said in its statement. Pardo sold $11.5 million of stock and Peden sold shares valued at $300,000 while privy to inside information, the agency said.