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Regulation and Compliance > Federal Regulation > SEC

SEC Eyes Life Settlement Investment Fund Creator

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The U.S. Securities and Exchange Commission (SEC) has charged a former investment advisor with stealing investor money that was supposed to be used to buy in-force life insurance policies.

The SEC has filed a civil suit in the U.S. District Court in Oakland, Calif., against Steven T. Kobayashi, who once worked as a financial advisor in the Walnut Creek, Calif., office of UBS Financial Services L.L.C.

Kobayashi formed a limited liability company, Life Settlement Partners L.L.C., Pleasanton, Calif., to help wealthy clients invest $1.4 million in life insurance policies in December 2004, SEC officials allege.

Kobayashi used some of the cash to buy about 25 life policies and at first operated Life Settlement Partners as a legitimate business, officials say.

Later, Kobayashi used firm assets, cash from a line of credit, and cash borrowed from the UBS and Life Settlement Partners to “pay enormous gambling debts, to hire prostitutes, and to buy luxury cars,” officials say.

Kobayashi resigned in 2009, shortly after a customer reported him to UBS. UBS then reported him to the SEC.

The U.S. attorney’s office has filed criminal charges against Kobayashi

The SEC is alleging that Kobayashi misused about $3.3 million obtained through securities-related transactions and that he also stole an additional $4 million in additional funds from Life Settlement Partners and UBS customers.

Kobayashi “agreed to settle the SEC’s charges against him without admitting or denying the allegations,” officials say. “He agreed to a permanent injunction from further violations of the antifraud and other provisions of the federal securities laws, and consented to the institution of public administrative proceedings against him in which he will be permanently barred from associating with entities in the securities industry.”

The court will determine how much Kobayashi must pay in restitution and fines at a later date, officials say.

Other life settlement compliance coverage from National Underwriter Life & Health:


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