For the second time in less than a year, the controversial life settlement industry has come under investigation from a major Massachusetts state agency.
Massachusetts Attorney General Martha Coakley has launched a probe into the industry, and two unnamed firms in particular, the Boston Herald reported. A spokeswoman for the Attorney General’s office said that the industry, which buys consumers’ life insurance policies and resells them to major commercial banks, who then flip those policies to investors, has been on the office’s radar for a while now.
Last fall, Massachusetts Secretary of State William Galvin began looking into the industry, and his office’s investigation is still ongoing, the paper said. In the past, Galvin has expressed concern that the life settlement industry is quite similar to the subprime mortgage market that saw home loans packaged and sold to large-scale investors.
A separate Herald report said that while regulators have recently begun to crack down on many abuses related to the life settlement industry, a number of major international banks like Credit Suisse, JPMorgan and Wells Fargo invest heavily in life settlements.