Lifetrade Investors Alleged Fraud by S&P, Wells Fargo

A group of investors launched a class action lawsuit against defendants including the Standard & Poor’s Global and Wells Fargo Bank, according to a 2017 Reuters report, alleging negligence and misconduct in connection with the “failed life-settlement fund” Lifetrade. As the report states, Lifetrade was a Curacao-based entity that suffered losses of “at least $685.8 million.”

The investors alleged that S&P committed fraud and misrepresentation when it assigned the fund “an investment-grade rating for five years despite the riskiness of the venture.” It also alleges that Wells Fargo “put its own interests as a lender on a line of credit ahead of its duties” as trustee and custodian of the fund and its assets, per Reuters.

As investors may be aware, life-settlement products involve an investor’s purchase of a life insurance policy. The policy holder receives a cash payment, while the investor receives the policy’s payout when the insured dies. Typically, policies have a higher value when the insured’s life expectancy is shorter.

According to a 2022 court filing, many of Lifetrade’s investors were elderly individuals based in Argentina and Japan. “The funds ultimately went belly-up after they could not satisfy investors’ requests to redeems shares as they arose or repay a $500 million line of credit with a Wells Fargo predecessor entity,” the filing states. “In August 2012, in lieu of a formal foreclosure, Lifetrade’s management entered into a settlement agreement with Wells Fargo pursuant to which Wells Fargo acquired the entirety of the funds’ assets in exchange for a cancellation of the debt.” As a result of this agreement, the lawsuit’s plaintiffs suffered the complete loss of their investments.

Carlson Law represents investors throughout the United States in claims against financial advisors and investment firms. If you or a loved one have suffered losses investing in Lifetrade, please call us at 888-976-6111 or complete our contact form for a free and confidential consultation.