The staff of the Nasdaq Stock Market has notified Life Partners Holdings Inc. that the company has 60 days to explain how it will regain compliance with Nasdaq listing rules, and the U.S. Securities and Exchange Commission has sent the company an amended Wells notice.
Life Partners, Waco, Texas (Nasdaq:LPHI), helps clients invest in life settlements.
The company notified the U.S. Securities and Exchange Commission (SEC) May 16 that it would need at least two extra weeks to file the Form 10-K annual report for the fiscal year ending Feb. 28, 2011, because managers had not yet completed the determination of the timing and amount of some non-cash impairment charges relating to life settlements held for investment.
The company then notified the SEC May 31 that it would need additional time to file the 2011 Form 10-K.
The impair determinations are taking longer than originally expected, and Life Partners also has encountered unanticipated delays resulting from a reexamination of revenue-recognition policies, the company says.
“We believe our revenue recognition policies are appropriate and do not anticipate retroactive changes at this time,” the company says in an SEC filing. “We will file our 2011 annual report as soon as we complete our impairment determinations and the external audit is finished. At this time, no definitive date has been discussed for the annual filing.”
The Nasdaq staff says that, because of the filing delay, Life Partners does not follow Nasdaq filing timeliness requirements.
Life Partners has until Aug. 1, 2011, to describe a plan for regaining compliance, the company says.
If the company submits a plan, Nasdaq can give a company 180 additional days to regain compliance, Life Partners says.
“The company intends to submit a plan to regain compliance to Nasdaq no later than [Aug.] 1, 2011,” the company says. “No assurance can be given that Nasdaq will accept the company’s compliance plan or grant an exception for the full 180-day period contemplated by the Nasdaq Listing Rules.
In related news, the SEC has updated a Wells notice it sent to Life Partners in May.
The SEC notified Life Partners in May that the SEC staff “will recommend that the SEC bring a civil injunctive action against the company and two of its directors and executive officers” for possible violations of securities laws and rules.
The SEC recently said its staff will recommend action against three directors and officers, and for alleged violations of more laws and rules.
“The company understood that the initial Wells Notice related primarily to its knowledge of and disclosures about the accuracy of the estimates of the life expectancies of settlors,” Life Partners says. “The company understands that the expanded Wells notice also includes allegations about the disclosures regarding and the propriety of certain accounting policies and practices, including revenue recognition, the impairment of life settlements held by the company for investment, and the stated policy for premium advances the company might make on certain client policies.”
A Wells notice is not a formal allegation or a finding of wrongdoing, Life Partners says.
“The company intends to respond by setting forth its positions and explaining why it believes an enforcement action is not warranted,” Life Partners says. “The company cannot predict whether the SEC will accept its positions or follow the recommendations of the staff and initiate an enforcement action.”
- Allison Bell