Life Settlements Are Securities, Texas Court Finds

By Jess Krochtengel (August 29, 2013, 8:03 PM EDT) -- A Texas appeals court on Wednesday ruled life settlements sold by Life Partners Inc. qualify as securities in Texas and should be regulated as such, in the first opinion in the state to require the investments to comply with the Texas Securities Act.

The Dallas Court of Appeals said life settlements, which allow investors to buy fractional interests in life insurance policies, should be treated as investment contracts, not insurance contracts, and must comply with the Texas Securities Act. A putative class accused Life Partners in 2011 of engaging in a scheme to offer and sell unregistered securities, but a trial...

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