by Structured Settlement Watchdog
Since my 12/1/2005 post on the same subject I believe that this story has some more traction. I just received word from a good source about a particular structured settlement broker attempting to take on qualified assignments.
As I understand it, the broker, or his company, is stepping into the role of substitute obligor when the periodic payment obligation is transferred off the books of the defendant or insurer. Generally, in a structured settlement, the assignee is a shell or subsidiary of the annuity issuer, with some form of guarantee of the assignee's assumed obligations by the annuity issuer or another party. This is the second instance that I've heard involving this particular broker. It is our understanding that this broker is using a legitimate annuity quote for illustrative purposes but not indicating that the assignee will pay this amount. Think there is potential confusion for the guardian ad litem, plaintiff attorney or the plaintiff themselves? You betcha!
Purportedly the proposed Assignee is (Name of Brokerage Firm). Who guarantees them? Does this Structured Settlement broker's corporate charter permit this activity? Does he/his firm take a fee for the assignment? What is disclosed to the parties?
When a traditional structured settlement is done there is a guarantee behind the assignee.
If (name of Structured Settlement broker) defaults who pays? Has the Guardian Ad Litem or plaintiff attorney checked the financials behind the (Name of structured settlement broker) beyond perhaps that broker's commitment to pay money to ATLA or the state bar association? In event the broker defaults is plaintiff a secured party (secured creditor) or a general creditor? Is being a secured party of (Name of Structured Settlement Broker) worth anything?
I've heard that one of the annuity carriers in the previous instance involving this particular broker was livid about this apparently unauthorized use of its software and rates and dressed down the broker. Now that a second annuity issuer's rates have been used one wonders how they will react.
I say it again….Know your assignee of your structured settlement transaction. Read my Dec 1, 2005 post. Understand the transaction, read the fine print or you could be left "holding the bag"!
If anyone else out there has encountered this sort of transaction please contact me.
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