New York is already a tough state on factoring transactions. It seems that the New York judiciary has picked up on the "structured settlement factoring vig" scandal and counter measures are in place. Things will be getting a whole lot tougher.
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On cases involving Court approval, structured settlement brokers and settlement planners in New York will NOW have to attest as part of an affidavit under penalty of perjury among other things:
"Neither I nor (Insert name of company) will, without the express consent of the plaintiff and the prior written approval of this court:
(a) provide any information about this settlement to any
factoring company for any purpose; or
(b) solicit the plaintiff or plaintiff’s family on behalf of any
factoring company for any purpose, including, but not
limited to, the proposed sale of plaintiff’s future periodic
payments, nor will I or (Insert name of company) participate,
assist, promote, or aid in such solicitation by any person, firm,
corporation or entity; or
(c) seek or accept any consideration, financial or otherwise, directly
or indirectly from a factoring company."
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It’s clear that the New York Courts WILL NOT TOLERATE a structured settlement broker or settlement planner who participates financially in the placement a structured settlement and subsequently solicits, or aids in the solicitation of their own clients to sell future periodic payment (rights), for financial consideration or otherwise. It will be interesting to see if other states follow suit.
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For the complete New York Court required affidavit click here. The factoring language is in paragraph 11. The affidavit, which appears to apply to settlement requiring Court approval is similar to the standard affidavit already being used by Creative Capital, 4structures.com, LLC, certain EPS brokers and others. A thank you goes out to Marty Jacobson of Creative Capital who assisted the Court in drafting the new provisions.
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The New York affidavit will affect prospective cases. It DOES NOT address General Obligations Law 5-1703 disclosures which must be made by the factoring company when submitting the matter for statutory Court approval of a structured settlement factoring transactions. This is where abuse can occur, where undisclosed (to the tort victim or the Court) commissions and referral fees may be paid to structured settlement brokers, settlement planners, financial planners and, based on the advertising of Structured Settlement Investments, Ltd., apparently some lawyers. There is proof that such payments reduce the net to the tort victim who is faced with unfortunate circumstances, even though one factoring company, Bentzen Funding Solutions (per admission 90% of whose clientele are "vig takers") has made the ludicrous assertion that the payment of commissions gets better deals for the tort victims.
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In the opinion of this author the Courts should revert to a State of Florida like disclosure at the time the factoring transaction is proposed to the Court. State of Florida factoring disclosures appear to require an itemization of all commissions and fees. Courts must also be aware that the factoring company may bury the broker’s commission in its discount spread.
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The Structured Settlement Clean Vendor List can be a useful resource to presiding judges, as well lawyers for tort victims who are evaluating new and existing professional relationships with structured settlement brokers, settlement planners and financial planners. The Structured Settlement Clean Vendor List is a growing list of structured settlement brokers and settlement planners who have voluntarily attested under penalty of perjury that they take no compensation for structured settlement factoring transactions, sell client lists to factoring companies or supply information about settlements to factoring companies.
FAQ on Structured Settlement Clean Vendor List
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