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ARTICLE · 02 OCTOBER 2006

NASD NTM 06-38: Life Settlements

Sutherland Asbill & Brennan LLP
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NASD issued a Notice to Members ("NTM 06-38") reminding firms and associated persons that life settlements involving variable insurance policies are securities transactions subject to NASD rules. This NTM follows other recent Notices regarding insurance product sales practices and serves to highlight the continuing regulatory scrutiny over this area.

United StatesFinance and Banking

Originally published September 19, 2006

NASD issued a Notice to Members 1 ("NTM 06-38") reminding firms and associated persons that life settlements involving variable insurance policies are securities transactions subject to NASD rules. This NTM follows other recent Notices regarding insurance product sales practices and serves to highlight the continuing regulatory scrutiny over this area.2

The Notice steers clear of characterizing life settlement transactions in either a positive or a negative light. Rather, it expresses a concern that the growth of the life settlement market will lead to increased competition resulting in aggressive marketing and inappropriate sales. The Notice highlights various obligations that the NASD rules impose on brokerage firms and registered representatives engaged in variable life settlement transactions.

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