Life Settlement Hedge Funds – What is a Life Settlement?

4 Replies

Over the past few years life settlements have become a more attractive investment opportunity and there is an increase in the amount of hedge funds which are being formed to invest in various life settlement strategies.  This article will discuss life settlements and will introduce some of the issues which hedge fund managers should discuss with their attorney if they want to start a life settlement hedge fund.

From Viaticals to Life Settlements and Premium Finance

Life Settlements are the younger sibling to the Viatical industry which was popular in the 1980’s with regard to AIDS patients (see SEC description of Viatical’s below).  A “life settlement” usually refers to a secondary market transaction on an insurance policy.  Typically an insured will sell its insurance policy to a third party (the investor) who will pay the insured more than the cash surrender value of the policy, but less than the death benefit.  The investor will then be liable for the premium payments and will receive the death benefit upon the death of the insured. Continue reading →

Raising Hedge Fund Capital – Special Investor Meetings

1 Reply

Often word of mouth is the best way to get an idea spread through groups of people – especially when most forms of marketing are not allowed.  One way to make a name for your hedge fund is through your existing investors who provide a source for potential investor referrals.  If your investors are happy with the returns of your fund and are excited about the investment program or the future prospects, they are likely to mention this to their friends at dinner and cocktail parties. Continue reading →

Banks and Hedge Fund Oversight: GAO Report

2 Replies

This article is part of a series examining the statements in a report issued by the Government Accountability Office (GAO) in February 2008.  The items in this report are important because they provide insight into how the government views the hedge fund industry and how that might influence the future regulatory environment for hedge funds. The excerpt below is part of a larger report issued by the GAO; a PDF of the entire report can be found here. Continue reading →

Life Settment Case Law after “Life Partners” – SEC v. Mutual Benefits

Leave a reply

Many individuals involved in the life settlement industry point steadfastly to the “Life Partners” case when asked if life settlements are securities.  While “Life Partners” is a very important case in the life settlement industry, it should be noted that the case is not binding on any jurisdiction outside of the DC Circuit which means other jurisdictions could take alternative positions than the DC Circuit.  In addition, state securities commissions are not bound by the “Life Partners” case.  The case below highlights that depending on the nature of the activities of the life settlement sponsor, the life settlements could be securities at the federal level and thus subject to the securities laws (including potentially the investment advisory laws).

Continue reading →

Sale of Viatical Investments as Securities (Washington State)

1 Reply

This release is from the Washington State Department of Financial Institutions.

****

In 1999, Securities Administrator Deborah Bortner sent out a letter to insurance agents in the State of Washington regarding the applicability of the state securities laws to the offer and sale of viatical settlement contracts to investors. Under such a contract, a terminally ill person sells the death benefit in his or her life insurance policy in return for cash that can be used for current expenses. Continue reading →

Sovereign Wealth Funds (SWF) as Potential Hedge Fund Investors

1 Reply

Hedge fund managers should be open to investments from all different types of investors including sovereign wealth funds or “SWFs.”  Sovereign Wealth Funds are government owned investment entitites.  Discussion of SWFs is usually with regard to many of the large oil producing countries, but a SWF can be established by any governmental entity including state entities (both Alaska and Texas have funds). Continue reading →

Forex Hedge Funds – Forex Commodity Pools

5 Replies

This is a guide for those managers who want to start a forex hedge fund.  It provides information on forex hedge fund structures, an overview of the registration requirements, and a discussion of the process of forming a forex hedge fund.  For the purpose of this article we are focusing on spot forex transactions, but much of this information also applies to those managers who trade foreign currency futures and forwards contracts. Continue reading →

NFA Releases More Information on Forex Registration

1 Reply

(www.hedgefundlawblog.com in conjunction with www.forexregistration.com)

The NFA released more information on the Forex registration requirements for Forex CPOs, Forex CTAs and Forex IBs (release is here).  The NFA specifically notes that the CFTC has not yet completed writing the registration requirements so there is not date set for registration.

With regard to the registration process, individuals will need to submit a Form 7-R throught the NFA’s Online Registration System and will need to have passed both the Series 3 exam and the new Series 34 exam which will be one hour wand will consist exclusively of forex-related questions.  The NFA has also released some of the exam topics which can be found here and which we have also republished as Forex Exam Topics.  The registrations will also need to submit fingerprint cards to the NFA which will be processed by the FBI.  Continue reading →