This is a misnomer as it may not meet the definition of annuity under the insurance law for many states and therefore does not enjoy the statutory protections, which is a risk for the buyer.
[3][4] Initially structured settlement payments rights were primarily packaged up by large buyers such as JG Wentworth, securitized and sold to institutional investors.
During a period where institutional capital became less available in the immediate aftermath of the 2008-2009 financial crisis, a number of intermediaries began marketing structured settlement payment rights to investors.
Some make reference to State Insurance Guarantee Funds of which the mere mention in connection with the sale or solicitation of a legitimate regulated annuity would be unlawful.
Altium Group's website continued to tout "Unparalleled Safety of Principal" in solicitation to investors[12] for a considerable time after the Wall transaction.
In January 2019, the Tennessee legislature introduced House and Senate bills excluding from coverage under the Tennessee Life and Health Insurance Guaranty Association Act a person who acquires rights to receive payments through a structured settlement factoring transaction, as defined in federal law, regardless of whether the transaction occurred before or after the federal law took effect.
[17] On August 19, 2017, Somerset CEO Thomas Burgess Hamlin issued an update to investors' Maryland Attorney General lawsuit against Access Funding, et al. ("the Lawsuit") in which he stated "An important difference is that the plaintiffs in the class action are trying to recover damages from Access Funding, but not to void the orders approving transfers of payments.
In September 2019 Thomas Burgess Hamlin settled a FINRA complaint against him[20] for $50,000 from an investor who was sold a factored structured settlement payment stream that was mislabeled "secondary market annuity".
In November 2016, the United States District Court for the Western District of Pennsylvania pointed out that "[a]s a caution to those investing in these [structured settlement factoring transactions], a court can later vacate the sale of the ... payments when the underlying plaintiff selling his ... payments lacked authority to sell ... leaving the eventual investors without the purchased asset".
A Vacated or Reversed order would result in the termination of future annuity payments to the investor" On September 1, 2017, Seneca One Finance filed a suit in Montgomery County MD[25] against US Annuity Services, Inc. and Jeremy Wright, which raises a number of allegations that, if proven, could be grounds to overturn or vacate orders and impact investors.
On September 14, 2017, a class action lawsuit filed in the Eastern District of Pennsylvania[26] has the potential to impact both securitization and individual investors.
The suit alleges Portsmouth, Virginia, Circuit Court judges were complicit in an "Annuity Fraud Enterprise" scheme, in which a Virginia lawyer and 79th District delegate, Steve Heretick, was the central figure, representing JG Wentworth, Seneca One, 321 Henderson Receivables and other settlement purchasers, that allegedly violated the rights of thousands of structured settlement annuitants.
Sunshine is the best disinfectant and we intend to provide evidence unearthed by this program to relevant State Attorneys General, the IRS, and the CFPB.
[28] Among the alleged illegal conduct described by DRB Capital is (1)violations of the internal revenue code section 5891; (2)violations of state structured settlement protection acts; (3)improper forum shopping; (4) suborning perjury by, among other things, making consumers execute affidavits containing false information about their residence and other matters; (5)violations of federal and state Deceptive and Unfair Trade Practices Acts and (6) DRB is seeking information on abusive and unfair trade practices including extortion behavior and practices against sellers[28] In re: Assignment of Certain Structured Settlement Payment Rights of James V McMillan[29] is a 2018 legal proceeding in Sumter County, Florida, in which James McMillan,[30] a victim of the October 15, 2003, Staten Island Ferry crash,[31] seeks to rescind nine alleged forum shopped ex-parte structured settlement transfer orders.