(By Balaseshan) Life Partners Holdings Inc. (NASDAQ: LPHI) said Travis County District Judge Stephen Yelenosky ruled in its favor, saying the life settlement transactions it facilitates are not securities under Texas law. Following the news, the shares jumped more than 100 percent in mid-day trading.
Although subject to appeal, the ruling effectively ends the Texas Attorney General's suit against Life Partners, which had asserted that the 21-year-old company's life settlement transactions were securities under Texas law.
In making its ruling, the court denied all relief sought by Texas Attorney General Greg Abbott, which includes an end to a temporary restraining order that will permit Life Partners to pay the $0.10 dividend it had previously declared to shareholders of record as of September 3, 2012. The court made the ruling after a two-day evidentiary hearing.
"The Attorney General brought this case knowing that both a Federal Court of Appeals and a Texas appeals court have ruled specifically that Life Partners' life settlements are not securities. The attorney general has issued inflammatory press releases and used this suit as a vehicle to make baseless claims of fraud, insolvency and a lack of regulation. None of that is true," said Brian Pardo, chief executive of Life Partners.
Life Partners Holdings is a publicly held company with over $40 million in assets, over $10 million in cash and no debt.
The company's subsidiary, Life Partners Inc., provides a valuable financial option to seniors who want to sell their life policies as well as to accredited investors looking for alternative investments.
"In fact, since the start of our fiscal year in March, we have seen over $40 million paid to owners of life settlements that were transacted through our company. We do not defraud or deceive anyone. The Attorney General's mischaracterization of our business was a disservice to the purchasers of our life settlements and to our shareholders who were damaged by this abuse of power," Pardo added.
LPHI is trading 111.64 percent higher at $3.09 on Wednesday. The stock has been trading between $1.08 and $7.49 for the past 52 weeks.