Friday, October 22, 2021

No. 443: The Secondary Market for Life Insurance Policies

In my 2015 book entitled The Insurance Forum: A Memoir, Chapter 9 is entitled "The Secondary Market for Life Insurance Policies." In that 12-page chapter, I discuss the origin and growth of the secondary market, including viatical settlements, life settlements, and stranger-originated life insurance (STOLI). I refer to STOLI as speculator-initiated life insurance (spinlife).

I have long been concerned about the negative impact of the secondary market (the "unselling" of life insurance) on life insurance companies and their policyholders. Recently I heard reports about life insurance companies and life settlement companies competing vigorously against one another in their efforts to persuade policyholders to cash in or sell their life insurance policies. For that reason, I decided to prepare this blog post to revisit the subject. After you read Chapter 9 of my Memoir, I would welcome your comments.


Friday, October 15, 2021

No. 442: A 25-Year Prison Term for a Securities Fraudster in Texas

The TSSB Press Release
On October 4, 2021, the Texas State Securities Board (TSSB) issued a press release announcing that Mejdi Mahmoud Abousaoui has been sentenced to 25 years in state prison and ordered to pay restitution of about $3 million for engaging in first-degree securities fraud. He was prosecuted in Fort Bend County, Texas.

The Felony Complaint
The charges against Abousaoui were in the form of an eight-page felony complaint. It charged him with engaging in a Ponzi scheme that ran from early 2015 through mid-2018 and involved at least 70 victims. The felony complaint lists the names of the victims and the amounts and dates of their losses. The first paragraph of the felony complaint reads:
Before me, the undersigned Assistant District Attorney of Fort Bend County, Texas, this day appeared the undersigned affiant, who under oath says he has good reason to believe and does believe that in Fort Bend County, Texas, Mejdi Mahmoud Abousaoui, hereafter styled the Defendant, heretofore, on or about and between March 1, 2015, and April 30, 2018, pursuant to one scheme and continuing course of conduct, did, unlawfully, then and there, directly and indirectly, and through his company Abousaoui Financial, LLC, sell and offer for sale investments in the Abousaoui Financial investment program (hereinafter referred to as the Program), being securities, namely: stocks, shares, notes, bonds, investment contracts, and evidences of indebtedness, to each of the persons listed below and in the following amounts:
The felony complaint lists the names of the victims. It also shows the dates and amounts of their losses.

According to the TSSB press release, Abousaoui has already paid more than $200,000 of restitution. He has been ordered to pay the remaining balance of about $2.8 million of restitution.

General Observations
I recommend that you read the felony complaint against Abousaoui in its entirety. A link to it is in the third sentence of this blog post. Comments from readers would be welcomed.


Friday, October 8, 2021

No. 441: The Massachusetts Securities Regulator Settles an Investigation of a Massachusetts Mutual Subsidiary

The Journal Article
On September 17, 2021, The Wall Street Journal carried a 600-word article on page B1 of the print edition entitled "GameStop Trader's Firm Is Fined—MassMutual faulted by regulator for lack of procedures to monitor activity of Keith Gill." The reporter was Caitlin McCabe. Here is the first paragraph of the article:
A Massachusetts Mutual Life Insurance Co. subsidiary agreed to pay a $4 million fine to settle an inquiry from Massachusetts securities regulators into the social-media and trading activity of its employees, including well-known GameStop Corp. investor Keith Gill.
The Two Consent Orders
William Francis Galvin is the Secretary of the Commonwealth of Massachusetts and heads the Massachusetts Securities Division. The settlement took the form of two Consent Orders, which readers may wish to review in their entirety, dated September 15, 2021 "In the Matter of MML Investors Services, LLC (MMLIS)."

One of the Consent Orders is Docket No. 2021-0004. Here is the first paragraph of the 18-page Consent Order:
This Consent Order is entered into by the Massachusetts Securities Division and MML Investors Services, LLC with respect to the investigation by the Division into whether MMLIS' activities and conduct violated the Massachusetts Uniform Securities Act, Gen. Laws ch. 110A, and the corresponding regulations promulgated thereunder at 950 Mass. Code Regs. 10.00 - 14.413.
The other Consent Order is Docket No. R-2019-0096. Here is the first paragraph of the 13-page Consent Order:
This Consent Order is entered into by the Massachusetts Securities Division and MML Investors Services, LLC with respect to the investigation by the Registration, Inspections, Compliance and Examinations Section of the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth regarding MMLIS' failure to register its agents who conducted securities business in Massachusetts, as well as the individuals responsible for supervising the agents, in violation of the Massachusetts Uniform Securities Act, Mass. Gen. Laws ch. 110A and the corresponding regulations promulgated thereunder at 950 Mass. Code Regs. 10.00 - 14.413.
General Observations
The regulatory settlement discussed in this blog post is complex. I recommend that you read the Journal article mentioned at the beginning of this blog post and the two Consent Orders. I would welcome comments from readers.


Friday, October 1, 2021

No. 440: The 9/11 Commission Report

As the 20-year commemoration of the terrorist attack on the United States blanketed the nation, I realized I had not read the 9/11 Commission Report. I have remedied the failure by reading the 593-page Report in its entirety. I then decided to prepare this blog post.

The 9/11 Commission
Congress and President George W. Bush created the National Commission on Terrorist Attacks Upon the United States (Public Law 107-306, November 27, 2002). Ten Commissioners, consisting of five Republicans and five Democrats chosen by elected leaders from our nation's capital, came together to present the Report without dissent.

The Commission's Mandate
The Commission had a sweeping mandate: to investigate facts and circumstances relating to the terrorist attacks of September 11, 2001, including those relating to intelligence agencies, law enforcement agencies, diplomacy, immigration issues, border control, the flow of assets to terrorist organizations, commercial aviation, the role of congressional oversight and resource allocation, and other areas determined relevant by the Commission. The Commission held 29 days of hearings and took public testimony from 160 witnesses.

Thomas H. Kean was Chair of the Commission. Lee H. Hamilton was Vice Chair. The other members were Richard Ben-Veniste, Fred F. Fielding, James S. Gorelick, Slade Gorton, Bob Kerrey, John F. Lehman, Timothy J. Roemer, and James R. Thompson. Philip Zelikow was the Executive Director of the Commission Staff.

Structure of the Report
The first major section of the Report is entitled "Inside the Four Flights." It describes in excruciating detail what happened on the four hijacked flights: American Airlines Flight 11, United Airlines Flight 175, American Airlines Flight 77, and United Airlines Flight 93.

The second major section of the Report is about the Federal Aviation Administration (FAA) and the North American Aerospace Defense Command (NORAD). The third major section is about National Crisis Management. The fourth major section, about "The Foundation of the New Terrorism," focuses on Usama [sic] bin Laden and also discusses Al Qaeda and its renewal in Afghanistan.

The fifth major section is entitled "Counterterrorism Evolves." It discusses the Central Intelligence Agency, the National Security Agency, the Department of Defense, the State Department, the Federal Bureau of Investigation, the Defense Intelligence Agency, the Drug Enforcement Administration, the Immigration and Naturalization Service, and other agencies.

General Observations
I was impressed by the quality of the Report. I think it is well worth taking the time to read it in its entirety. A link to the Report is in the first paragraph of this blog post. I would welcome comments from readers.