Stone Street Financial, Inc. praised the recent actions of the Florida Office of Insurance Regulation and the Securities and Exchange Commission in bringing enforcement actions against Mutual Benefits Corporation which has been accused of defrauding thousands of individual investors in life insurance policies.
Mutual Benefits Corporation has also been accused of operating a Ponzi scheme whereby a total of $7.6 million dollars has been shuttled between accounts to cover premiums for purchased life insurance policies.
“Stone Street Financial expresses its profound sympathy for the thousands of investors who have been taken advantage of by companies that raise money from individual investors to purchase life insurance policies,” said President and CEO Lawrence Brown. “We have long advocated that a life settlement is not a proper investment for individual investors and such transactions should be considered securities,” said Brown.
In fact, in a testimony read before the U.S. House of Representatives Committee on Financial Services Oversight and Investigations Subcommittee on February 26, 2002, David Lewis, general counsel, of Stone Street Financial, called for the “amendment of the Federal Securities Act of 1933 so that the packaging and sale of interests in life insurance policies to private investors are deemed to be Securities under that Act and are regulated by the Securities and Exchange Commission,” in order to provide adequate protection for private investors.
In contrast to companies that raise money from private investors to purchase life insurance policies, Stone Street Financial and a small number of other companies use funding from major sources of institutional capital to purchase life insurance policies. Further, Stone Street Financial is not only institutionally funded but is also institutionally owned.
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