Investor woes regarding their investments in the Bermuda-based Northstar Financial Services, which has since filed for bankruptcy protection, keep pouring in. All over the globe people have been impacted as the Northstar Financial Services (Bermuda) products were aggressively sold by brokers, many seemingly in pursuit of the generous commissions and incentives promised by Northstar, like this investor from Japan who claims that her “Bancwest Investment Services broker proposed a Northstar investment rather than keeping her money in savings and checking accounts.”
Generous commissions are usually an early warning sign about the inherent value of the investment. High expenses, such as commissions, tend to tilt the scales away from investors, as the security will have to cover more ground, that of hefty commissions and fees before they can make money. They also often act as blinkers in the eyes of the brokers pushing the investment, overlooking suitability for investors.
Haselkorn & Thibaut, P.A. continues to be approached by investors affected by Northstar. We encourage you to contact us at 1-800-856-3352 for a free, no-obligation consultation with an investment fraud attorney. Our firm is a contingency fee law firm which means we do not get paid until you do!
Quoting David Fox in the Royal Gazette, “Investors in Northstar Financial wanted their money and the company was unable to pay liquidation or redemption requests. The company was estimated to have incurred a deficit of upwards of $260 million. By September 2020 they were reporting just $8 million in assets, and they filed for bankruptcy protection in 2020.”
It is now known that the company has been charged by the Supreme Court of Bermuda. The former owner of Northstar, Greg Lindberg, has been sentenced to seven years and three months in prison apart from a fine of $35,000. He was indicted in 2019.
Northstar offered variable annuity products which are a fairly standard investment offering. The product can be seen as an insurance policy wrapped around a mutual fund core that allows the investor to buy bonds and stocks and build its value. The fund can be converted to an annuity plan on retirement or at a time permitted by the terms of the product, which will, thereafter, give you regular monthly payments. In the event of death, the survivors receive the death benefit.
The attractions of “segregated account protection, generous liquidity terms and a variety of commitment periods, as well as the benefits of a Bermuda trust structure” were also pitched while making the sale. Unfortunately, they were no protection against the financial misdeeds of the company and its management.
Investors have been filing claims through the Financial Industry Regulatory Authority (FINRA) arbitration channel available to them, even as the Bermuda Monetary Authority moves to liquidate the company. These claims are against Northstar, as well as the brokerage firms and financial firms that sold it to them. Unsurprisingly, the unsuitable recommendation is the claim that crops up in most of these cases.
If you are an investor in a Northstar annuity product that was recommended by an investment advisor or brokerage firm, you probably have a right to proceed through the FINRA arbitration process for recovering your losses. Both FINRA and SEC (Securities Exchange Commission) require evaluation of the investor’s objectives by the advisor and matching it with the risk profile of the proposed investment. In any case, the risk profile of the investment needs to be disclosed in its entirety to investors at the time of making a recommendation.