Life Partners Stock Plummets After Firm Gets SEC “Wells Notice”

Today is Friday the 13th and the date that is so often associated with bad luck proved so again for Life Partners Holdings, Inc.  The company’s stock, which trades under the ticker LPHI, plummeted following the filing of an 8-K stating that they had received a “Wells notice” from the SEC on May 9th.

A Wells Notice is a letter that the Securities and Exchange Commission sends to people or firms to notify them that they plan to recommend enforcement proceedings against them.  According to the notice received by LIfe Partners, the SEC could bring civil injunctive action against the company, its Chief Executive Brian Pardo and General Counsel Scott Peden.

“We believe an enforcement action is not warranted,” the firm wrote in the filing.  The firm also said, “We cannot predict whether the SEC will accept our positions or follow the recommendations of the staff and initiate an enforcement action.”

The company has repeatedly been in the media over scrutiny surrounding their projections of life expectancies for their life settlement investments.  The allegations being made suggest that the company used life expectancies that were significantly shorter than industry standard underwriting would project.  Investors making purchases of life settlements will typically pay more for shorter life expectancies and if these life expectancies are false and longer than expected it could lead to severe investor losses.

The companies shares closed down over 20% at $5.62.  The company’s shares have fallen from their January 2, 2009 all time high of $28.09.

To read the full text of the 8k filing click here:  http://members.life-exchange.com/profiles/blogs/life-partners-hit-with-wells