The commission has filed a suit against LPI, a life settlement and viatical provider.
Scott Peden, general counsel, and two other executives of Life Partners Holdings (LPI) are being investigated by the SEC for defrauding shareholders in life settlement deals, Bloomberg Businessweek reports.
The commission has filed a suit against LPI, a life settlement and viatical provider, Brian Pardo, chairman and chief executive, David Martin, chief financial officer and Peden for providing falsified information to investors about the firm’s profit.
According to the SEC, the firm knowingly made shareholders believe that the company generates its revenues ‘by employing an unqualified medical doctor to assign baseless life expectancy estimates to the underlying insurance policies,’ says Robert Khuzami, SEC enforcement director in a statement.
The company, which buys the rights of death benefits from policyholders in exchange for huge payments, purposely underestimated life expectancies used in transactions from 2007 to 2011, the SEC says. Â
Peden, previously served as the general counsel and corporate secretary of the Texas-based company and as its president since 2000.
Prior to that, he worked as vice president and general counsel for LPI since its incorporation in 1991. Peden has been certified to carry out work in the life settlements field and has repeatedly testified in that area.
‘The senior-most executives at Life Partners concealed significant risks to the business, manipulated financial statements with improper accounting, and knowingly profited from their misconduct by executing insider trades based on information that was not available to the public,’ David Woodcock, director of the federal watchdog’s Fort Worth Regional Office, said in a statement yesterday.
