Texas' Securities Fraud Suit Against Life Partners Revived

By Jess Krochtengel (February 6, 2014, 7:27 PM EST) -- A Texas appeals court revived the state's allegations that Life Partners Inc. violated the Texas Securities Act by selling fraudulent, unregistered fractional interests in life insurance policies, overturning Thursday a trial judge's decision that the life settlements qualifed as securities.

In a brief opinion, the Third Court of Appeals said it was following the reasoning of an August decision from the Fifth Court of Appeals that held life settlements should be treated as investment contracts, not insurance contracts, and as such are subject to compliance with the Texas Securities Act.

Texas sued Life Partners and its publicly traded Life Partners Holdings...

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