SEC and FINRA investor bulletin on pension or structured settlement income streams. A solution in search of a problem?

Earlier this month the SEC issued an investor bulletin entitled " Pension or Settlement Income Streams, What you need to know before buying or selling them." While it is not unusual for the SEC or FINRA to provide alerts to the general public on certain types of investments or issues which they feel might be harmful to investors, the nature of this particular alert cuts across and seems to jumble together two very distinct issues and transactions. 


The first is the sale of structured settlement income streams by court settlement beneficiaries who receive periodic payments as a result of a verdict or settlement for personal injury that occurred at some time in the past. While this is a practice that is still somewhat controversial in settlement professional circles, the law and process governing this process is covered under IRC section 5891 and is also supervised under state law in the 47 states which have adopted the model legislation as to process. 

The second issue they address is the rising market for investors to purchase what they identify as "Pension or structured settlement income stream products." This is a fairly recent market and is typically promoted to and through structured settlement or settlement planning firms who offer these as an alternative income tool as the yields are reportedly higher than those offered on primary structured settlement product.

To sort out some of the issues on this bulletin we have asked the past President of the National Association of Settlement Purchasers  NASP, Attorney Matt Bracy to comment on this investor alert and to address specific points in the bulletin as to the concerns raised by the SEC in this release. As this is lengthy topic that covers a great deal of ground, this will be a three part series looking at each issue.  

You may find a link to the SEC and FINRA alert at