SEC Sues Retirement Planners for Making False Claims to Investors
The Securities and Exchange Commission today charged a self-described retirement planning firm and its principals with falsely telling customers that interests in life settlements they offered and sold were “guaranteed,” “safe as CDs,” and “federally insured.”
The SEC also alleges that they used a bogus “net worth calculator” that improperly qualified some prospective investors for purchases by including income that investors hadn’t received, such as future pension and Social Security benefits.
The SEC charges were filed in the U.S. District Court for the Northern District of Texas against Novers Financial and its principals Christopher A. Novinger and Brady J. Speers, who live in Mansfield, Texas, and host a financial radio show. The SEC’s complaint alleges that from 2012 to 2014, they sold approximately $4.3 million in life settlement interests to 26 investors.
“We allege that Novinger and Speers described speculative investments as safe and secure and were willing to manipulate investors’ financial information to make a sale,” said David Peavler, Associate Director of the SEC’s Fort Worth Regional Office. “No matter what a salesperson tells you, interests in life settlements are never guaranteed, risk-free, or federally insured.”
Interests in life settlements are investments based on potential payouts on insurance policies held by others. Typically they can only be sold to investors who meet certain income or net worth levels. The SEC alleges that, to get around those limits, Novinger and Speers provided prospective investors with a net worth calculator that factored in future income to artificially inflate client assets. For example, according to the SEC complaint, one couple’s non-homestead assets falsely “ballooned” from $263,000 to nearly $1.5 million when the calculator improperly included 20 years’ worth of Social Security and retirement payments the couple anticipates receiving in the future.
In addition to the charges against Novers Financial and the two principals, the SEC charged ICAN Investment Group LLC and Speers Financial Group LLC for acting as unregistered broker-dealers. The SEC seeks injunctive relief, return of allegedly ill-gotten gains with interest, and financial penalties.
The SEC investigation was conducted by Ronda Blair and Barbara Gunn of the SEC’s Fort Worth Regional Office. B. David Fraser will handle the litigation.
The SEC’s Office of Investor Education and Advocacy advises investors to always check the background of anyone trying to sell them an investment, especially to determine whether the person is properly licensed and registered with the SEC, FINRA, or a state regulatory authority. For information on how to conduct a background check on a financial professional, visit the SEC’s website for individual investors: www.investor.gov.
For additional information on the particular risks that life settlements may pose to investors, read the SEC’s Investor Bulletin about these products.