A panel discussing the securities regulation of life settlements advised caution for broker-dealers with registered reps who work on these transactions.
Panelists offered their views during the 12th annual fall conference of the Life Insurance Settlements Association here.
If a broker-dealer is in doubt about whether securities laws apply to a life settlement transaction, then there are general guidelines it should keep in mind, according to Cecilia Jordana, senior regulation specialist with the NASD.
She said the b-d should be mindful of execution, supervision and compensation.
If a registered rep is involved in a transaction in which a life settlement is sold and then a security is purchased, that transaction would fall under the purview of securities regulators, she explained. So, a b-d would need to be directly involved in the oversight of such a transaction rather than just receiving notification as an outside transaction, Jordana said.
When asked how a b-d can be comfortable about whether it is or needs to be in compliance with securities law, Jordana replied that on-site visits can be helpful in getting a better sense of how involved a b-d needs to be with a registered rep’s activities.