Life Partners Holdings Receives Well Notice
Waco, Texas-based Life Partners Holdings, which buys life-insurance policies at a discount and then sells shares to investors, could be facing civil charges in its future from a federal investigation into how it forecasts the insured’s life expectancy.
Last week, the company and two of its top officers – Brian D. Pardo and R. Scott Peden – received a Wells notice from the Securities and Exchange Commission (SEC) informing them of the possibility that the regulator will recommend a civil enforcement action against them for alleged securities laws violations.
Receipt of a Wells Notice gives individuals or companies the chance to argue against further action before the SEC makes a decision on whether to move forward.
In January, Life Partners disclosed that it was the target of an SEC probe. The news came one month after a story appeared in the Wall Street Journal about how the company estimates life expectancies.
As reported May 17 by the Associated Press, life-expectancy projections are important because Life Partners charges investors more to buy into policies on people who are expected to die in the nearer future. If the insured person lives longer than Life Partners predicts, the payout is delayed and investors must continue paying premiums. This, in turn, reduces investors’ eventual returns.