Is Life Partners a Stock Scam?

Investors across the globe share a single greatest fear: to see their investments turn into nothing. While the phenomenon is not very common, unlucky investors sometimes find a trusted company dissolute or accused of fraud, spiraling the stock price down to pennies.

In the case of bankruptcy, shareholders are typically out of luck in the medium-term, until the company does something to turn itself around. When stock frauds occur, class action lawsuits are rampant and shareholders have the chance to recover their investments. Throughout 2011 and 2012, one company has been alleged of stock fraud, continuously deflecting thousands of investors from defeating it in a court of law.

Life Partners Holdings LPHI is a small-cap company that has been accused of fraud several times. On January 4, 2012, the SEC formally filed a lawsuit against the company and three of members of its senior management. In 2011, various private law firms filed class action suits against the company, alleging significant stock fraud.

In order to better understand the lawsuit against the company, Benzinga reached out to Bill Kyros of Kyros & Pressly LLP, one of the preeminent firms pursuing class action suits against Life Partners.

According to Kyros, Life Partners may have used unrealistic data in order to create skewed metrics used in selling life insurance policies. Moreover, the prosecution is claiming that the company hid historical data in order to make its products appear more appealing for customers.

As a direct result of these manipulations, attorneys allege that the company has misrepresented its financial statements and did not take precautions to ensure accuracy in its external reporting procedures. As a result, lawyers claim that shareholders were unable to truly understand the company, resulting in improper investments.

Shareholders who bought the stock between May 2007 and January 2011 are eligible to take part in the class action lawsuit. Stock fraud is a serious crime that affects innocent shareholders very heavily, literally destroying the value of their holdings. In the end, Life Partners may have operated an honest operation, but shareholders should continue to monitor the case and determine the truth over time.

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