by John Darer CLU ChFC MSSC CeFT RSP CLTC
Pay close attention to statements made in pleadings in ongoing Arizona litigation that continue to destroy what little credibility is left of the terms "secondary market annuity" and "secondary market annuities". Retirees should pay attention, as should insurers, settlement planners, financial planners and their
clients.
Genex Capital Corporation June 11, 2021
In its answer to Plaintiffs' First Amended Complaint and Counterclaims in ongoing Arizona litigation cited below, dated June 11, 2021, Genex Capital Corporation admitted, in answering paragraph 31, that "one component of its business involves purchasing from payees future structured settlement payments due under structured settlement annuities and assigning to investors a subset of those rights…" (emphasis added) ( also multiple other references to "subsets of those rights…" see source below at 13, 53, 56, 89, 109, 126)
Source: Genex Capital Corporation, a Delaware Corporation v Seeley Capital Management, Inc., a Massachusetts corporation; et al and Related Counterclaim Richard L. Keefer and Vicki L. Keefer, husband and wife; et al; v Genex Capital Corporation, a Delaware Corporation; et al and Genex Capital Corporation, a Delaware Corporation, a Delaware Corporation v Richard L. Keefer and Vicki L. Keefer, husband and wife, Hunmi Pak, a married man; E. Dwayne Walls, a married man; and PANABCO, a partnership Arizona Superior Court County of Maricopa Case Nos. CV 2020-013796 and CV2020-004958 (Consolidated) [the pleadings are a matter of public record]
Genex Capital Investors Response to Genex Capital Corporation Counterclaims
Counter defendants admit Genex is a " company that purchases structured settlement annuity payment rights" "from Payees and assigns a portion of those rights" to investors " for an agreed upon price" [ July 23, 2021 Answer to Counterclaim #9]
In my June 18, 2021 post Secondary Market "Annuity" E&O Claims Exposures for Financial Advisors, Settlement Planners and Their E&O Insurers I referred to the E&O claims exposure for secondary market "annuities" as a ticking time bomb for Financial Advisors, Settlement Planners and E&O Insurers
I encourage E&O insurers and their insureds to pay close attention to the Arizona litigation. There should be a close examination of the language in their policies to see if it covers advice about the factored structured settlement payment streams, an unregulated, unregistered financial product often recklessly marketed as "secondary market annuities", a misrepresentation. Neither factored structured settlement payment streams nor their "subsets" are annuities. Are insurers aware of their exposure? Should there be an explicit exclusion written into the policy for activity related to factored structured settlement payment streams?