Life Partners Settlements Aren’t Securities, Court Rules
Life Partners Holdings Inc. and its Life Partners unit won a ruling by a Texas judge that the interests it sells in life insurance policy settlements aren’t securities covered by state law.
Judge Stephen Yelenosky denied state Attorney General Greg Abbott’s bid for an order blocking the Waco-based businesses from selling those policy interests after a two-day hearing at the Travis County District Court in Austin. Yelenosky said he would issue a written order later.
Abbott alleged in a lawsuit last month that Life Partners was deceiving buyers of the settlement interests about the life expectancies of people insured under the policies. The company denied those claims and said two prior courts had already decided the securities issue in its favor.
“I don’t think this is a security under Texas law,” Yelenosky said before hearing any defense testimony at today’s proceeding. “Maybe I understand why it should be a security, but that’s not the question,” he said.
Scott Peden, president of Life Partners Inc. and general counsel of Life Partners Holdings, said after the hearing, “We’re very pleased with the result and are pleased to see that justice was done.”
Peden and Chief Executive Officer Brian Pardo were also named as defendants in the attorney general’s complaint.
Abbott will appeal the ruling, his spokeswoman, Lauren Bean, said in an e-mailed statement.
“Life Partners is charged with defrauding thousands of investors in violation of the Texas Securities Act. The defendants are attempting to evade state oversight by arguing that its products are not securities -- a claim that is inconsistent with prior U.S. Supreme Court precedent,” Bean said.
The case is Texas v. Life Partners Holdings Inc. (LPHI), D-1-GV- 12-001128, District Court of Travis County, Texas, 201st Judicial District (Austin).
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