by Structured Settlement Watchdog
Secondary Market "Annuity" Settlement of FINRA claims
Brian Thomas Horn has paid off Barry Cooper to settle a FINRA claim against him in a lump sum of $55,000. The “Horn paying” follows a payoff by Thomas Burgess Hamlin of the Cooper FINRA claim against him in September 2019 for $50,000, according to FINRA, as I reported about in the Fall.
Secondary Market "Annuity" investment has not paid what it was supposed to for more than 24 months, with no end in sight
Barry Cooper, a Florida retiree whose navy retirement money was invested in 2013 in a "Secondary Market Annuity" which did not pay out as promised. It was supposed to start beginning January 2018. Mr. Cooper depended on the secondary market "annuity" money for a secure retirement. Now the secondary market "annuity" payments have still not arrived. The suspension of payments is the result of competing claims from the Access Funding scam of Baltimore lead paint victims. The Access Funding scam was prominent Washington Post news story in August 2015 that received national attention because most of those targeted by the scam were minorities living in Baltimore City. Coopers were first notified of competing claims in February 2017. Brian Thomas Horn, who was with Somerset Securities at the time of the sale to Cooper, allegedly made certain misrepresentations that were subject to the FINRA Complaint filed December 6, 2018.
FINRA Complaint against Brian Thomas Horn
Claim alleged "Brian Horn recommended the claimant use the majority of his retirement savings to purchase a Secondary Market Annuity that was unsuitable for the claimant, that the product was misrepresented as being a safe investment, and that the solicitation was made to the claimant's wife who had no authority over the claimant's account". Product purchased in 2014. [Source: FINRA Broker Check for Brian Thomas Horn}
Broker Comment by Brian Thomas Horn Following Settlement
"THIS CLAIM RELATED TO AN APPROVED OUTSIDE BUSINESS ACTIVITY INVOLVING A FACTORED STRUCTURED SETTLEMENT SOLD TO CLAIMANT IN 2013. THE UNDERLYING PAYMENT STREAM AT ISSUE WAS SUSPENDED BY THE ANNUITY COMPANY DUE TO A COMPETING CLAIM AND LITIGATION CONCERNING THE TRANSFER OF THE PAYMENT STREAM, WHICH HAD BEEN PREVIOUSLY APPROVED FOR TRANSFER BY THE CIRCUIT COURT OF BALTIMORE COUNTY. BECAUSE THE LITIGATION CONCERNING THE PAYMENT STREAM WAS STILL PENDING IN THE STATE OF MARYLAND, AND SUCH LITIGATION WAS UNLIKELY TO RESOLVE IN THE NEAR TERM, THE CLAIM WAS SETTLED AS A COMPROMISE. IN SO SETTLING, RESPONDENTS DENIED ANY AND ALL LIABILITY". [ Source : FINRA Broker Check for Brian Thomas Horn]
Horn Makes Admission After "Genie Is Out of The Bottle"
Interesting that Horn now refers to what he sold Cooper, via Cooper's wife, as a factored structured settlement payment stream, the truth. Despite a disclaimer of liability on FINRA Broker Check, it can only be seen as an admission. Horn was a rep for Somerset Securities when the deal with Cooper went down. The website secondarymarketannuites.com, associated with Somerset Wealth Strategies, in a screen shot captured in 2013, heavily promoted "high yields with great safety". Somerset was notably militant about using the term secondary market annuity even as we barraged them for it. A Secondary Market Annuity is an intellectually dishonest scam label for factored structured settlement payment streams used by merchants of factored structured settlement payment streams. They are not annuities and the NAIC later came out with a statement confirming same. In its disclsoures in advsertsing on its website , Somerset said to the public "SMIA, FSS & LW are not deposits and are not insured by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. They may be partially or wholly guaranteed by State Guaranty Associations and Somerset WS makes no representations or warranties in this regard". True or not, regardless of the disclosure, there is no reason for the disclosure unless it was used to convince someone to invest in the deals. Anyone who has an insurance license knows it is unlawful to discuss the guaranty associations in connection with the sale of annuities or life insurance. It's a Hobson's Choice. If it is an annuity, it's unlawful to use the guaranty funds. And if it isn't an annuity, which it isn't, you've admitted to posing something as an annuity, that is not, to an investor.
The Ongoing Secondary Market "Annuity" Saga
"The defendants in the class action have asked the Maryland Court of Appeals (Maryland’s highest court) to hear the case, a request that court may but is not required to grant. It will take weeks, or possibly months, before the Court of Appeals decides if it will hear the appeal, and if it does, there will be further briefing, oral argument, and additional delay while the court prepares its decision. As a result, it may take a year or longer for the appellate process to conclude". [Emphasis ours] [June 4, 2019 update to investors, Somerset Wealth Strategies' Tom Hamlin delivered the bad news, 6 weeks after a shocking to investors, highly negative ruling by the Maryland Court of Special Appeals]
"There are 150+ investors, plus 5 affected firms that are fighting for payment rights" said Hamlin in a September 18, 2018 missive.
The Cooper case highlights the inherent transactional risks of investing in factored structured settlement payment streams which, in my observation and opinion were inadequately explained, until the Wall and Cooper cases came to light. Militant companies deceptively marketed these payment streams as annuities, even using insurer logos, likely without authority to use them in such manner. For example a 2013 screenshot of the home page of the company Horn sourced these products from, shows the trademarked logos of Prudential and New York Life prominently on secondarymarketannuities.com. Not hard to see how consumers such as the Coopers could be confused or misled back then.