According to the U.S. Securities and Exchange Commission (SEC), from February 2012 through January 2014, Christopher A. Novinger and Brady J. Speers, and their company NFS Group, LLC d/b/a Novers Financial (collectively the “Defendants”) fraudulently offered and sold life settlement interests. In so doing, the SEC claims that Mr. Novinger and Mr. Speers made false and misleading representations to prospective investors about their purported business experience and financial expertise and that the Defendants misrepresented the investments.
The SEC alleged that Mr. Novinger and Mr. Speers also constructed fake, meaningless titles for themselves to make investors believe that they were experienced and sophisticated financial advisers. The SEC alleged that Mr. Novinger and Mr. Speers used terms such as “licensed financial consultant,” “licensed consultant,” and “licensed financial strategist” toward that end. In truth, they had no training relating to securities and non-insurance related financial products, including life settlements. The SEC also alleged that the Defendants told investors that the life settlement investments were “safe,” “risk free,” “safe as CDs,” “the most secure, safe method for growing funds,” “federally insured,” and finally comprised of “polices insured with large, A-rated companies and backed by Federal Reserves.”
A life settlement is a transaction in which an owner of a life insurance policy sells his/her life insurance policy to a third party for more than the policy’s cash surrender value but less than the policy’s face value. After a life insurance policy has been sold in a life settlement transaction, the buyer can divide the future benefits payable under the policy into fractions and sell these fractional interests to others. These fractional interests in the future benefits payable under a life insurance policy, upon the death of the underlying insured, are referred to as life settlement interests. As part of their scheme, the Defendants allegedly used a “net worth calculator,” which improperly inflated investors’ assets by including anticipated social security, pension and other similar payments for 20 years into the future. This allowed the Defendants to misrepresent to life settlement providers that they sold the unregistered investments to “accredited investors.”
According to the SEC, Mr. Novinger, Mr. Speers and Novers Financial sold more than $4.3 million in life settlement interests to 26 investors and that three were not accredited investors. Mr. Novinger and Mr. Speers obtained commissions totaling nearly $515,000 as a result of their sales. According to the SEC, Mr. Novinger, Mr. Speers and Novers Financial violated the anti-fraud and securities registration provisions of the Federal securities laws.
Attorney Pearce began his career at the SEC as an enforcement attorney more than 35 years ago. His SEC defense law practice clients have included public companies and their officers and directors, broker-dealers, investment advisors, and individuals being investigated in connection with their personal securities transactions. He has broad, extensive experience in matters arising from alleged 10b-5 fraud violations including, “insider trading,” Section 16(b) “short swing profit,” and Section 14 “proxy rule” violations as well as Section 9 “market manipulation” cases.
Have you have been contacted by the SEC or believe that you may be subject of an investigation? If so, call Mr. Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce defends various entities and individuals who may be the subject of an SEC investigation or SEC enforcement action regarding their alleged involvement in securities laws violations.
This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to representing investors and financial industry professionals throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.