The Six-Feet Over/Under
In a macabre backwater of finance, gamblers bid against each other to buy life insurance payouts on people who have yet to die. While the game sounds exotic, the close ties between two of its players are business as usual for Wall Street.
Advanced Settlements, a top broker in the fast-growing "life settlements" market, has an especially cozy relationship with one of the market's big buyers, a review shows.
The three co-presidents of Orlando, Fla.-based Advanced Settlements are the majority shareholders of Abacus Settlements, a firm that pays cash to people who are willing to bargain away the right to their death benefit while they're still living. Insurance industry regulatory filings reveal that Advanced Settlements executives Scott Kirby, Sean McNealy and Matthew Ganovsky each own a 25% equity stake in the two-year-old Abacus.
Craig Seitel, the president of Abacus, owns the remaining 25% equity interest. He's listed in regulatory filings as the operational manager of the firm, which is based in New York. The executives at Advanced, a division of National Financial Partners (NFP), are described as passive members at Abacus, with "no day-to-day responsibilities relating to the operations.''The ties between the two companies are no secret in the life-settlement industry, which last year reached the $10 billion mark in terms of future insurance payouts sold to investors. But it's not clear how widely known the relationship is among individuals looking to unload their unwanted life insurance policies -- even though Advance and Abacus have taken some steps to disclose their ties. Some worry that the relationship between Advanced and Abacus has the potential for a conflict of interest, given that a broker primarily represents the interests of a seller. The concern is that disclosure alone doesn't eliminate the incentive a broker with Advanced Settlements might have to give Abacus preferential treatment in the bidding process.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV