SSEK Investigates Claims That Charles Schwab Recommended Advisory Firms Market Vida Longevity Fund To Customers

Charles Schwab Should Have Known RIAs Were Promoting the Fund 

Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) is looking into losses suffered by Vida Longevity Fund, LP investors. Many investors were recommended this open-ended hedge fund by Creative Planning, Pine Oak Investment Advisors, or other registered investment advisors (RIAs) that Charles Schwab Corporation referred them to. 

While it is not uncommon for Schwab to recommend RIAs to clients, the broker-dealer either knew or should have known that these firms were marketing the Fund to customers.

The Vida Longevity Fund was launched in 2010 by Vida Capital, Inc., which is based in Austin, Texas. Investing mostly in insurance products, such as annuities, structured settlements, and life settlements, the open-ended hedge fund is into correlated investment strategies that are concentrated on longevity-contingent risks and linked to insurance. 

Unfortunately, there are concerns that Vida Capital has been improperly valuing its assets and that the company, along with the firms that marketed the Vida Longevity Fund,  may have misrepresented the risks. Alleged diligence lapses may have allowed financial advisors to fail to detect whether the improper asset valuation by Vida Capital had occurred. 

Due Diligence Failures and Unsuitable Recommendations to Retail Investors Alleged  

Investment advisors and broker-dealers are both under scrutiny for possibly having unsuitably recommended the Fund to many low-risk, conservative retail investors, including retirees and unsophisticated investors. 

Considering that the investment thresholds for this hedge fund are in the six figures, it is highly questionable why it was marketed to these customers at all. It is very possible that the high commissions played a role. Firms that sold Vida Longevity Fund shares earned high commissions, including 5% -15% incentive fees and 1.5% – 2% management fees.

Changes to Vida Capital’s business practices have also brought up questions over whether the way it valuated the Fund violated securities laws. In addition to possible misrepresentations related to valuations, it looks like there were negative asset valuations. The Vida Longevity Fund also was definitely reporting lower returns even before COVID-19. 

A recent class-action lawsuit brought against the open-ended hedge fund by its own investors focuses on the valuation errors. It also alleges a failure to disclose conflicts of interest in a memorandum that didn’t note that the then-CEO controlled another company that was also involved in life settlements and was a Vida competitor. 

The plaintiffs contend that that rival company invested $40M in Vida but then withdrew that money a few years ago while the Fund was raising funds from investors without the latter’s knowledge. 

Skilled Private Placement Attorneys Representing Vida Longevity Fund Investors 

If you have suffered losses in Vida Longevity Fund, your best chance of financial recovery is to work with experienced private placement attorneys. Our law firm can help you pursue a Financial Industry Regulatory Authority (FINRA) arbitration claim against the brokerage firm that recommended and sold you shares in this hedge fund. 

If Charles Schwab recommended the RIA that sold you the Vida Longevity Fund shares, you may have grounds for a case against this broker-dealer to recover damages. Whether you’re an investor with Creative Planning, Pine Oak Investment Advisors, or another advisory firm, call SSEK Law Firm at (800) 259-9010 today or fill out our contact form for a free case consultation.

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