Life Partners stock climbs after court ruling in Austin

Posted Wednesday, Sep. 26, 2012  comments  Print Reprints

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Shares in Life Partners Holdings Inc., parent of a life insurance settlements broker, soared more than 150 percent Thursday morning, following an Austin court ruling that tossed out Texas Attorney General Greg Abbott’s case against the Waco firm for alleged illegal trading in securities.

The ruling allows Life Partners to distribute a previously announced 10 cents a share dividend, which was to have been paid this month but had been in limbo because of the case. Abbott’s office said the ruling will be appealed, and noted that the firm faces a separate suit filed by the Securities and Exchange Commission in January.

The company’s shares (ticker: LPHI) were up 170 percent in extremely active trading at mid-day. CEO Brian Pardo expressed vindication for the outcome in the Texas action.

“The Attorney General brought this case knowing that both a federal court of appeals and a Texas appeals court have ruled specifically that Life Partners’ life settlements are not securities,” he said in a statement released by the company.

Abbott, he said, “issued inflammatory press releases and used this suit as a vehicle to make baseless claims of fraud, insolvency and a lack of regulation. None of that is true. We have been in business for 20 years. We have facilitated over 143,000 purchaser transactions involving over 6,500 policies totaling over $3 billion in face value.”

Abbott and the SEC both alleged that Life Partners bought policies from the elderly and terminally ill using predictions of life expectancies from established actuarial firms, then withheld those estimates from potential investors, to whom fractions of the policies were sold. Until last year, prospective investors only saw life expectancies created by a Reno oncologist with no actuarial training. These estimates often predicted a far earlier demise of the insured parties, the cases claimed.

“We do not defraud or deceive anyone,” Pardo’s statement said. “Life Partners is licensed as a viatical and life settlement company by the Texas Department of Insurance, with whom we file our transaction documents, make certain disclosures to insureds and sellers, file annual reports, and abstain from unfair business practices. The Attorney General’s mischaracterization of our business was a disservice to the purchasers of our life settlements and to our shareholders who were damaged by this abuse of power."

Barry Shlachter, 817-390-7718

Twitter: @bshlachter

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