According to industry reports, the US Securities and Exchange Commission has formed a multidisciplinary task force (“Task Force”) to investigate life settlements (i.e. the sale of life insurance products by policyholders to third party investors). The Task Force is particularly interested in the recent bundling and securitization of life settlements by Wall Street, and is concerned that such securitization is akin to the securitization of mortgages which contributed to the current economic downturn.
The Task Force will examine various issues raised by life settlements including sales practices with respect to investors and privacy rights in connection with the insured’s health information. The Task Force plans to reach out to state insurance and securities regulators in connection with its investigation.