Life Partners Holdings, Inc. (Nasdaq GS: LPHI)
announced that the Fifth District Court of Appeals, Dallas, Texas, has ruled that the Life Partners, Inc. life settlements are securities under Texas law, reversing a prior Texas District Court ruling in favor of Life Partners, Inc. This decision conflicts with two prior appellate court cases in which Life Partners, Inc. had prevailed and in which the Courts had held that the life settlements were not securities. In 1996, the Federal Circuit Court for the District of Columbia had ruled in
SEC v. Life Partners, Inc
. that the settlements were not securities under federal law. Further, in 2004, the Waco Court of Appeals held, in
Griffitts v. Life Partners, Inc.,
that the settlements were not securities under Texas law. Notably, Life Partners, Inc. is based in Waco, Texas. While the
decision is a final judgment, the recent Dallas Court of Appeals decision is not.
“We are surprised and obviously disappointed in the ruling,” said Life Partners Holdings CEO, Brian Pardo. “In light of the conflict between this decision and that of the Waco Court of Appeals, we plan to timely file a Petition for Review with the Texas Supreme Court. We will use this interim period of time to consider modifications to our business model to conform to the Texas securities laws if and when an adverse ruling should ever become final.”
The case is styled
Arnold v. Life Partners, Inc
Dist. Texas Ct. of App., No. 05-12-00092-CV.
is the world’s oldest and one of the most active companies in the United States engaged in the secondary market for life insurance, commonly called “life settlements.” Since its incorporation in 1991, Life Partners has completed over 150,000 transactions for its worldwide client base of over 29,000 high net worth individuals and institutions in connection with the purchase of over 6,500 policies totaling over $3.1 billion in face value.
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