| WASHINGTON, March 12
WASHINGTON, March 12 A federal judge on
Wednesday reversed a jury finding that Life Partners Holdings
and its executives were liable on one count of fraud,
dealing a blow to U.S. securities regulators.
The Securities and Exchange Commission had sought to prove
that Life Partners intentionally misled investors over nearly
four years about core aspects of its "life-settlements" business
and that its two top executives engaged in insider trading.
In its verdict last month, an Austin, Texas-based jury in
the federal court had cleared the company and its executives on
eight of the 12 charges filed by the SEC, while finding Life
Partners liable for fraud when it filed misleading statements
about revenue recognition policies in two months in 2007.
Defense attorneys for the company asked U.S. District Court
Judge James Nowlin to consider tossing out the claim. Federal
district court judges have the right to consider reversing jury
verdicts handed down before them if, after a trial, attorneys
can justify it.
The Life Partners case has garnered national attention
because of the company's unusual business of providing "life
settlements" in which the holder of a life insurance policy
sells the policy to an investor in exchange for a lump sum. The
investor then assumes the responsibility for the premium
payments and collects the payout on the policy once the insured
In his order, Nowlin said the SEC had not provided any
evidence at trial that Life Partners or its executives
specifically violated fraud laws in January or February of 2007.
There was "simply too little to go on to support a finding
against Defendants on Plaintiff's very narrow...allegation," he
The judge did, however, let stand the jury's decision to
hold the company and its executives liable on several less
serious charges involving bookkeeping, reporting and
certification by the CEO on the company's financial statements.
Elizabeth Yingling, a lawyer for the company, said in an
email: "Life Partners is very happy with this ruling."
SEC spokesman John Nester said the SEC is still "reviewing
the decision." The agency added that it felt it had still
prevailed on other substantial charges against the company
The reversal of the verdict comes at a time when SEC Chair
Mary Jo White, a former federal prosecutor, is pledging that her
trial unit will stand ready to take more cases to trial as part
of a get-tough enforcement stance.
Despite her pledge, the SEC in recent months has suffered a
string of losses that has dragged down its trial win rate.
In a separate victory for the SEC on Wednesday, a federal
judge in New York ordered former Goldman Sachs Group Inc
trader Fabrice Tourre to pay more than $825,000 after a jury
last summer found him liable for defrauding investors in a
subprime mortgage product that failed during the financial