By accessing, listing any policy on, or entering any bid into, or otherwise using the LIS Market marketplace, the LIS Market participant agrees to be bound by, and comply with, the LIS Market Rules and all applicable Laws and Regulations.
TABLE OF CONTENTS
Page
CHAPTER I DEFINITIONS; INTERPRETATION; AMENDMENTS
CHAPTER II GOVERNANCE OF LIS MARKET
CHAPTER III LIS MARKET PARTICIPANTS
CHAPTER V AUCTION AND TRADING RULES
CHAPTER VI SECONDARY TRANSACTIONS
CHAPTER VII PURCHASE AND SALE OF TERTIARY POLICIES
CHAPTER VIII CERTAIN RULES CONCERNING LISTED POLICIES
APPENDICES
APPENDIX A: LIS Market Service Fee Schedule
APPENDIX B: Agency Agreement
APPENDIX C: Participant Agreement
APPENDIX D: Escrow Agreement
APPENDIX E: Purchase and Sale Agreement
CHAPTER I
DEFINITIONS; INTERPRETATION; AMENDMENTS
The terms defined in this Rule I-1 shall for all purposes of these LIS Market Rules have the meanings specified herein.
Accepted Sales Offer. An acceptance of a Sales Offer submitted to the System by a Buyer Participant or a Buyer Participant Agent, pursuant to the terms and conditions of a Sales Offer submitted to the System by a Seller Participant or a Seller Participant Agent.
Account. With respect to each LIS Market Participant, an account with LIS Market for LIS Market Participant’s access and usage of LIS Market.
Affiliate. A Person who, directly or indirectly, Controls, is Controlled by, or is under common Control with, such other Person.
Agency Agreement. An agreement executed between Buyer Participant Agent or Seller Participant Agent and its Principal, granting authority from the Principal to such Buyer Participant Agent or Seller Participant Agent and the form of which is attached hereto as Appendix B.
Anti-Money Laundering Laws. All applicable laws, regulations and government guidance on the prevention and detection of money laundering, including 18 U.S.C. Sections 1956 and 1957, and the BSA.
Applicable Law. With respect to any Person or Policy, any statute, law, regulation, rule or ordinance of any Governmental Authority applicable to such Person or Policy.
Auction. Collectively, the listing of Policies, submission of Purchase Offers, Sales Offers, Purchase Offer Revocations, acceptance of Purchase Offers or Sales Offers and any and all acts, processes and transactions related thereto pursuant to a Participant Agreement and Participant Documents which occur through LIS Market.
Authorized User. A Person, whether an employee, agent or otherwise, who is disclosed to LIS Market and is given access to a LIS Market Participant’s Account and Password under the direction, control or access of such LIS Market Participant.
Bid. The submission by a Participant or an Authorized User of a Purchase Offer or Accepted Sales Offer for a Listed Policy at a specific dollar amount (in U.S. Dollars).
Bidder. A Participant or its Authorized User who is participating in an Auction for a Listed Policy by submitting a Bid or Bids.
Bidding Hours. With respect to any Listed Policy, the hours during which LIS Market accepts Bids for such Listed Policy during the Bidding Period, as stated in the Rules.
Bidding Period. The duration of an Auction with respect to any Listed Policy for which a Bid will be accepted, as established by a Policy Owner, Seller Participant or Seller Participant Agent, on a Policy by Policy basis.
Board of Directors. The Board of Directors or other governing body or managing partner of LIS Market, as constituted from time to time.
Broker. A licensed viatical or life settlement broker in a state that requires a life settlement broker to be licensed.; also referred to as a Licensed Broker, that is a Seller Participant with respect to a Secondary Policy, Listed Secondary Policy or Secondary Transaction, acting on behalf of and as the licensed viatical or life settlement broker, of a Policy Owner.
Broker Agreement. An agreement entered by and between a Broker and Policy Owner.
BSA. The Bank Secrecy Act (31 U.S.C. Section 5311 et. seq.), and its implementing regulations, Title 31 Part 103 of the U.S. Code of Federal Regulations.
Business Day. Any day on which LIS Market is open for listing, bidding or transacting business, as determined by LIS Market.
Buyer. A Buyer Participant or Principal of a Buyer Participant Agent which purchases a Listed Policy by submitting a Selected Bid or the party which is responsible for funding the purchase of a Listed Policy.
Buyer Participant. A Participant which desires to purchase a Listed Policy and submits to the System Purchase Offers, Purchase Offer Revocations and Accepted Sales Offers with respect to such Listed Policy.
Buyer Participant Agent. A Participant, acting on behalf of and as the agent of its Principal, a party that desires to purchase a Tertiary Sale Policy, and acts pursuant to the authority granted by the Principal to such Participant under the terms of an Agency Agreement executed by and between such Participant and its Principal.
Closing Date. The date on which the purchase and sale of any Listed Policy has closed as mutually agreed upon by the Buyer and the Seller, upon satisfaction of all closing conditions imposed by Seller, including, without limitation, acknowledgement by the Insurer of the receipt of applicable change of ownership and change of beneficiary forms such that the ownership of and the beneficiary rights under such Listed Policy have vested in the Buyer or any securities intermediary acting on the Buyer’s behalf.
Closing Price. With respect to any Listed Policy, the purchase price associated with the Selected Bid.
Closing Documents. With respect to any Listed Policy, (i) in a Tertiary Transaction, the Purchase and Sale Agreement and Escrow Agreement; or(ii) in a Secondary Transaction, the life settlement agreement, escrow agreement and such other documents required by a Provider.
Confidential Policy Identification Information. Non-Public Personal Information and Protected Health Information that identifies the Insured, including but not limited to, name, address, telephone and social security numbers.
Confirmation. A notice of confirmation of a Selected Bid of a Listed Policy generated by the System upon a Seller Participant or Seller Participant Agent accepting a Purchase Offer for a Listed Policy or upon a Buyer Participant or Buyer Participant Agent accepting a Sales Offer for a Listed Policy and submitted to Participant with the Selected Bid.
Control. The power to exercise a controlling influence over the management or policies of a Person, unless such power is solely the result of an official position with such Person. Any Person who owns beneficially, directly or indirectly, more than 20% of the voting power in the election of directors of a corporation, or more than 25% of the voting power in the election of directors of any other corporation which directly or through one or more Affiliates owns beneficially more than 25% of the voting power in the election of directors of such corporation, shall be presumed to control such corporation. The terms “controlling” or “controlled” shall have meanings correlative to the foregoing.
Disbursement Instructions. With respect to each sale or purchase of a Listed Policy, instructions, approved by LIS Market and delivered by Buyer to the Escrow Agent, that set forth information regarding the amounts to be disbursed and distributed at closing to the parties to the purchase and sale transaction closing and LIS Market.
Emergency. Any occurrence or circumstance that, in the opinion of the Board of Directors, or any authorized Person designated by the Board of Directors, requires immediate action and threatens or may threaten the fair and orderly operation of LIS Market. An Emergency may include, without limitation, any of the following:
(a) any manipulative activity or attempted manipulative activity;
(b) any circumstance that may materially adversely affect the performance of obligations of the LIS Market Participant hereunder;
(c) any action taken by any Governmental Authority, in each case that may have a direct adverse effect on LIS Market;
(d) any circumstance that may have a severe, adverse effect upon the physical functions of LIS Market, including fire or other casualty, bomb threats, terrorist acts, substantial inclement weather, power failures, communications breakdowns, computer system breakdowns, malfunctions of plumbing, heating, ventilation and air conditioning systems and transportation breakdowns;
(e) the bankruptcy or insolvency of any LIS Market Participant or the imposition of any injunction or other restraint by any Governmental Authority upon a LIS Market Participant, that may affect the ability of such LIS Market Participant to perform its obligations hereunder; and
(f) any circumstance in which it appears that any LIS Market Participant or any other Person has failed to perform its obligations hereunder, is insolvent, or is in such financial or operational condition or is conducting business in such a manner that such Person cannot be permitted to continue in business without jeopardizing the safety of other LIS Market Participants or LIS Market.
Escrow Agent. A banking institution approved by LIS Market to act in its capacity as escrow agent under an Escrow Agreement to a Secondary Transaction or Tertiary Transaction.
Escrow Agreement. An agreement (i) in the case of a Secondary Transaction, to be entered into by and among Provider, Policy Owner and Escrow Agent in connection with the closing of the purchase and sale of a Listed Secondary Policy; or (ii) in the case of TertiaryTransaction, to be entered into by and among the Buyer, Seller and Escrow Agent in connection with the closing of the purchase and sale of a Listed Tertiary Policy; and the form of such Escrow Agreement is attached hereto as Appendix D.
Escrow Fund Price. Amount (i) in the case of a Secondary Transaction, deposited by Provider for purchase of a Listed Secondary Policy to be held in escrow equal to the total amount of the Closing Price, the LIS Market Fee and escrow fee; or (ii) in the case of a Tertiary Transaction, deposited by a Buyer for purchase of a Listed Tertiary Policy to be held in escrow equal to the total amount of the Closing Price, LIS Market Fee and escrow fee;
Escrowed Funds. The funds (i) in the case of a Secondary Transaction, deposited by Provider for purchase of a Listed Secondary Policy to be held in escrow by the Escrow Agent pursuant to the terms of the Escrow Agreement, in an amount equal to the Escrow Fund Price; or (ii) in the case of a Tertiary Transaction, the funds deposited by a Buyer for purchase of a Listed Tertiary Policy to be held in escrow by the Escrow Agent pursuant to the terms of the Escrow Agreement, in an amount equal to the Escrow Fund Price.
Essential Policy Information. Any documents or data required by LIS Market, in its sole discretion for the consummation of a Secondary Transaction or Tertiary Transaction, not included in the Required Policy Listing Data or Policy Listing Information previously submitted by a Seller Participant or Seller Participant Agent, with respect to a Tertiary Policy or Secondary Policy and of which notice to Seller Participant and Seller Participant Agent is provided for the submission of such data or documents.
Exchange. The electronic marketplace developed and operated by LIS Market to list, sell and purchase life insurance policies; also referred to as the System.
GLBA. The Gramm-Leach-Bliley Act of 1999 and state insurance laws or regulations, including, without limitation, viatical and life settlement laws and regulations, enacted pursuant thereto, as each may be amended from time to time.
Governmental Authority. Any federal, regional, state, local executive, legislative, judicial, regulatory, legal or administrative agency, court, commission, department, taxing authority, or other authority thereof having jurisdiction over Listed Policies and LIS Market Participants.
HIPAA. The Health Insurance Portability and Accountability Act of 1996 and regulations promulgated thereunder.
Insured. An individual whose life is insured by a Policy.
Insurer. Insurance company that has issued a Policy.
LE Company. A Person that is engaged in the business of preparing and issuing medical underwriting or life expectancy evaluation reports for Insureds.
LIS Market. Life Insurance Settlement Market, LLC, a Florida limited liability company (including its successors), and when used with reference to the administration of any LIS Market Rule, either the Board of Directors or the officer, employee, agent, committee or delegate to whom appropriate authority to administer such provision has been delegated by the Board of Directors.
LIS Market Administrator. Any individual employed or designated by LIS Market who is responsible for: administering the rights and obligations of LIS Market Participants, overseeing Auctions, monitoring the functioning of and transactions occurring through LIS Market and otherwise administering the Rules.
LIS Market
Fee. The fee payable to LIS Market by Participant with respect to the sale and purchase of a Listed Policy in an amount to be determined in accordance with the LIS Market Service Fee Schedule as set forth in attached Appendix A.
LIS Market Participant. Individually or collectively, collectively, a Buyer Participant, a Buyer Participant Agent, a Seller Participant or a Seller Participant Agent; also referred to as a Participant.
Listed Policy. A non-variable life insurance policy listed for sale on the System for purchase in a Secondary Transaction or Tertiary Transaction.
Licensed Broker. A licensed viatical or life settlement broker in a state that requires a life settlement broker to be licensed and which enters into an agreement with Policy Owner to offer a Secondary Policy for sale.
Licensed Provider. A licensed viatical or life settlement provider in a state that requires a viatical or life settlement provider to be licensed.
Listed Policy. A Secondary Policy or Tertiary Policy listed for sale on the System upon approval by LIS Market.
Listed Secondary Policy. A Secondary Policy listed for sale by a Licensed Broker, on behalf of the Policy Owner, or Policy Owner on the System upon approval by LIS Market.
Listed Tertiary Policy. A Tertiary Policy listed for sale by a Tertiary Seller Participant or Tertiary Seller Participant Agent on the System upon approval by LIS Market.
Net Face Amount. The face amount of the Policy payable at death minus any retained death benefit or loans on the Policy.
.Net Secondary Sale Proceeds. The net amount payable to the Policy Owner with respect to each Secondary Transaction pursuant to a Secondary Sale Agreement.
Non-Public Personal Information. Non-public personally identifiable information regarding Policy Owners and/or Insureds that constitutes “non-public personal information” as such term is defined in GLBA.
OFAC Laws and Regulations. The Executive Order 13224 issued by the President of the United States of America, the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code of Federal Regulations), the Terrorism List Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations), the Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of the U.S. Code of Federal Regulations), and the Cuban Assets Control Regulations (Title 31 Part 515 of the U.S. Code of Federal Regulations), and all other present and future federal, state and local laws, ordinances, regulations, policies, lists (including, without limitation, the Specially Designated Nationals and Blocked Persons List) and any other requirements of any Governmental Authority (including, without limitation, the United States Department of the Treasury Office of Foreign Assets Control) addressing, relating to, or attempting to eliminate, terrorist acts and acts of war, each as hereafter supplemented, amended or modified from time to time, and the present and future rules, regulations and guidance documents promulgated under any of the foregoing, or under similar laws, ordinances, regulations, policies or requirements of other states or localities.
Participant. A participant under the Participant Agreement acting in the capacity as a Buyer Participant, a Buyer Participant Agent, a Seller Participant or a Seller Participant Agent, as applicable, to list and offer for sale, or bid on for purchase a Secondary Policy or Tertiary Policy.
Participant Agreement. A Participant Agreement to be entered into by and between LIS Market and Participant, in the form attached hereto as Appendix C.
Participant Documents. Collectively, Participant Agreement and such other agreements entered into by Participant in connection with its participation in the LIS Market marketplace.
Participation Privileges. With respect to LIS Market Participants and their respective Authorized Users, the right to access and use LIS Market.
Password. With respect to each LIS Market Participant, a password or a code designated by LIS Market to be used for the exclusive purpose of accessing the LIS Market Participant’s Account.
Person. Any natural person, association, partnership, limited liability company, joint venture, trust or corporation.
Policy. An in-force, non-variable life insurance policy and all right, title and interest in, to and under such life insurance policy, including any and all right to receive policy benefits payable thereunder, to designate beneficiaries thereof and to withdraw or borrow against any cash surrender value thereof.
Policy Listing Information. The information and documents available to Participants with respect to each Listed Policy as provided in Rule V-3. With respect to a Secondary Policy, the information and data required, including Required Policy Listing Data, to be delivered by a Policy Owner or a Broker to the System as set forth in Rule IV-5, and with respect to a Tertiary Policy, the information and data required, including Required Policy Listing Data, to be delivered by Seller Participant or Seller Participant Agent to the System as set forth in Rule IV-6.
Policy File. With respect to each Listed Policy, any and all documents which are delivered in connection with the listing, including Policy Listing Information and the closing of a transaction on LIS Market , including Essential Policy Information .
Policy Owner. A Person which holds the ownership rights and title in a Policy.
Policy Summary. A summary of information relating to a Policy to be listed on LIS Market.
President. The individual appointed by the Board of Directors from time to time to serve as president of LIS Market.
Principal. Party which gives authority to a Buyer Participant Agent or Seller Participant Agent to act on its behalf and as its agent in the purchase or sale of a Tertiary Policy under an Agency Agreement.
Protected Health Information. Information regarding Policy Owners and/or Insureds that constitutes “protected health information” as such term is defined in HIPAA.
Provider. A licensed viatical or life settlement provider in a state that requires a viatical or life settlement provider to be license, also referred to as a Licensed Provider, designated by Buyer and approved by LIS Market to purchase, on behalf of Buyer, Secondary Listed Policies in Secondary Transactions conducted on LIS Market.
Purchase and Sale Agreement. A purchase and sale agreement (i) in connection with a Secondary Transaction, to be entered into by and between a Policy Owner and a Provider to effectuate the sale and purchase of a Secondary Policy, as a life settlement agreement on the form provided by Provider; or (ii) in connection with a Tertiary Transaction to be entered into by and between a Policy Owner and a Buyer to effectuate the sale and purchase of a Tertiary Policy, of which form is attached hereto as Appendix E.
Purchase Offer. An offer to purchase a Listed Policy or counteroffer to a Sales Offer, submitted to the System by a Buyer Participant or Buyer Participant Agent, on behalf of and as the agent of its Principal.
Purchase Offer Revocation. A revocation of a Purchase Offer by a Buyer Participant or Buyer Participant Agent, made prior to the acceptance of such Purchase Offer by a Seller Participant or Seller Participant Agent and pursuant to the terms of the Participation Agreement.
Qualified Participant. A Participant that is a bank, investment bank, insurance company, pension fund or Licensed Provider that, in LIS Market’s judgment, maintains privacy policies and standards designed to protect the anonymity of Policy Owners and Insureds.
Rating Agency. Fitch Inc., Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc., or such other rating agency approved by LIS Market in its sole and absolute discretion.
Regulated Policy. A Secondary Policy, the Insured of which is a resident of a state requiring a Licensed Broker or a Licensed Provider under Applicable Law.
Required Policy Listing Data. The minimum information or documents of the Policy Listing Information (i) with respect to a Secondary Policy, that is required to be provided by Policy Owner or Broker prior to such Secondary Policy’s listing on the System; or (ii) with respect to a Tertiary Policy, that is required to be provided by Seller Participant or Seller Participant Agent, as applicable, prior to such Tertiary Policy’s listing on the System.
Rescission Period. The period during which the Policy Owner has the right to terminate or rescind a Secondary Sale Agreement, as mandated under Applicable Law.
Rules. These LIS Market Rules and any rule, interpretation, stated policy or instrument corresponding to any of the foregoing, in each case as adopted or amended from time to time by LIS Market, in its sole and absolute discretion.
Sales Offer. An offer for sale for a Listed Policy, made by a Seller Participant or Seller Participant Agent, acting on behalf and as agent of its Principal, that has the authority to offer such Listed Policy for sale under specified terms and conditions imposed by the Seller.
Secondary Buyer Participant. A Buyer Participant which offers to purchase a Listed Secondary Policy.
Secondary Policy. A Policy eligible to list or offer for sale in the secondary market on System by a Policy Owner or Seller Participant, on behalf and as the Broker of Policy Owner, for sale to a Provider in a Secondary Transaction.
Secondary Policy Purchase and Sale Agreement. A Purchase and Sale Agreement in connection with a Secondary Policy, also known as a life settlement agreement , to be entered into by and between a Policy Owner and a Provider to effectuate the sale and purchase of a Secondary Policy; also referred to as a Secondary Sale Agreement.
Secondary Sale Agreement. A Purchase and Sale Agreement in connection with a Secondary Policy, also known as a life settlement agreement to be entered into by and between a Policy Owner and a Provider to effectuate the sale and purchase of a Secondary Policy ; also referred to as a Secondary Purchase and Sale Agreement. .
Secondary Sale Documents. The Secondary Sale Agreement and all closing documents utilized by a Provider in connection with, and to effectuate, a closing of a Secondary Transaction.
Secondary Seller Participant. A Seller Participant which lists or offers for sale, a Secondary Policy on the System.
Secondary Transaction. The sale of a Listed Secondary Policy by the Policy Owner to Provider and the transfer of the ownership and all rights and interests under such Secondary Policy to Buyer.
Selected Bid. With respect to each Listed Policy, the acceptance of a Purchase Offer made at the discretion of the Seller Participant or Seller Participant Agent or an Accepted Sales Offer.
Selected Bidder. The Participant which submits the Selected Bid
Seller. A Seller Participant or Principal of a Seller Participant Agent, typically the Policy Owner, which sells a Listed Secondary Policy and Listed Tertiary Policy.
Seller Participant. A Participant (i) in the case of a Secondary Transaction which lists or offers for sale, a Secondary Policy on the System and which is typically the Broker; or (ii) in the case of a Tertiary Transaction, which lists and offers for sale a Tertiary Policy on the System and which is the Policy Owner.
Seller Participant Agent. A Participant that lists or offers for sale a Tertiary Policy on the System, on behalf of and as an agent of its Principal pursuant to the terms of an Agency Agreement executed by and between Seller Participant.
Seller’s Reserve Price. The price below which a Seller will not agree to sell its Listed Policy to a Buyer. The Seller’s Reserve Price is the actual price that the Seller will receive in connection with the sale of its Policy and is net of (a) any commissions paid to a Broker or Seller Participant Agent, (b) the LIS Market Service Fee or (c) escrow fee.
System. The electronic marketplace developed and operated by LIS Market to list, sell and purchase life insurance policies; also referred to as the Exchange.
Tertiary Buyer Participant. A Buyer Participant which offers to purchase a Tertiary Policy on the System.
Tertiary Buyer Participant Agent. A Participant that offers to purchase a Tertiary Policy, on behalf of and as an agent of its Principal pursuant to the terms of an Agency Agreement executed by and between Buyer Participant Agent and its Principal.
Tertiary Policy. A Policy previously purchased in a Secondary Transaction or Tertiary Transaction, outside or through the Exchange and is eligible for listing or offering for sale in the tertiary market through the Exchange by a Tertiary Seller Participant or Tertiary Seller Participant Agent.
Tertiary Seller Participant. A Seller Participant which lists or offers for sale a Tertiary Policy on the System.
Tertiary Seller Participant Agent. A Participant that lists or offers for sale a Tertiary Policy, on behalf of and as an agent of its Principal pursuant to the terms of an Agency Agreement executed by and between Seller Participant Agent and its Principal.
Tertiary Transaction. The sale of a Listed Tertiary Policy by a Seller to a Buyer, with the Selected Bid and the transfer of the ownership and all rights and interests by such Seller to such Buyer under such Listed Tertiary Policy.
Terminated Transaction. A purchase and sale of a Policy that LIS Market, in its sole and absolute discretion, terminates by reason of the fact that that either the Seller Participant, Listing Agent, Buyer Participant or any other party to the transaction is not able to fulfill or has not fulfilled the conditions of closing.
I-2. Rules of Interpretation
For all purposes of the Rules, except as otherwise expressly provided herein or unless the context otherwise requires:
(a) the terms defined in the Rules include the plural as well as the singular and vice versa;
(b) words importing gender include all genders;
(c) any reference to a Chapter, Rule, Section or Appendix refers to a Chapter, Rule or Section of, or Appendix to, the Rules;
(d) any reference to the Rules refers to these Rules, including all Appendices hereto, and the words herein, hereof, thereto, hereto and hereunder and words of similar import refer to the Rules and their Appendices as a whole and not to any particular Chapter, Rule, Section, Appendix or any other subdivision;
(e) references to days, months and years refer to calendar days, months and years, respectively; and
(f) all references herein to “including” shall be deemed to be followed by the words “without limitation. ”
The titles of the Rules have been inserted for convenience of reference only and shall not affect the meaning of the Rules.
The Board of Directors may, in its sole and absolute discretion at any time, adopt New Rules and amend, repeal or supplement any existing Rule. All such new Rules, amendments, supplements, or repeals shall become effective on such date as may be determined by LIS Market and shall be posted on the LIS Market website. Unless otherwise specified in the notice accompanying such posting, all new Rules, amendments, supplements and repeals shall become effective and binding upon LIS Market Participants immediately upon posting on the LIS Market website.
The business and affairs of LIS Market shall be managed by the Board of Directors in accordance with its reasonable business judgment and Applicable Law.
II-2. Committees and Panels
The Board of Directors may create committees of the Board of Directors, whether standing or otherwise, as it may from time to time deem necessary or advisable. Members of such committees may be members of the Board of Directors, independent unrelated parties, LIS Market Participants, Authorized Users or such other individuals as may be qualified to serve on such committee, provided, that the President may be a voting ex officio member of any committee.
The Board of Directors may from time to time constitute and appoint, by rule or resolution, special committees of the Board of Directors, and designate their composition, responsibilities and powers.
II-3. Power of the Board of Directors to Review Decisions
The Board of Directors has the power and authority to review, and to affirm, modify, suspend or overrule, any and all decisions and actions of standing committees, special committees formed pursuant to Rule II-2 and officers of LIS Market appointed pursuant to Rule II-4.
II-4. Officers
The Board of Directors may appoint a President, one or more Vice Presidents, a Compliance Director, a Secretary, a Treasurer, one or more Assistant Secretaries, one or more Assistant Treasurers and such other officers as it may deem necessary or appropriate from time to time, in each case for such term and on such other conditions as it sees fit. Any officer of LIS Market may be a director, officer or employee of Life Insurance Settlement Market, LLC or its Affiliates. .
II-5. Confidentiality of Deliberations
No member of the Board of Directors or any committee established by the Board of Directors or LIS Market shall use or disclose any material, non-public information obtained in connection with such member’s participation in the Board of Directors or such committee, for any purpose other than the performance of his or her official duties as a member of the Board of Directors or such committee.
Any member of the Board of Directors or employee or agent of LIS Market who violates any provision of this Rule shall indemnify LIS Market for, and hold LIS Market harmless against, any losses, damages or costs that LIS Market may incur as a result of such violation.
LIS Market may from time to time enter into such agreements with domestic or foreign self-regulatory organizations, associations, boards of trade and their respective regulators providing for the exchange of information and other forms of mutual assistance for financial surveillance, routine audits, market surveillance, investigative, enforcement and other regulatory purposes as LIS Market may consider necessary or appropriate.
III-1. Registration/Application Process
(a) Each LIS Market Participant shall deliver to LIS Market an executed Participant Agreement, as applicable, and a list of its initial Authorized Users.
(b) Each Buyer Participant Agent or Seller Participant Agent shall deliver a copy of the executed Agency Agreement between itself and its Principal. Each Broker shall deliver a copy of the executed Broker Agreement between itself and the Policy Owner.
(c) Upon determination by LIS Market, in its sole and absolute discretion, that a LIS Market Participant has fully satisfied the conditions and requirements of its registration/application process, LIS Market will issue an Account and Password to be used by the LIS Market Participant to access and use the System.
(a) LIS Market Participant shall cause all Authorized Users to comply with (i) the Rules and (ii) Participant Agreement, and (iii) Agency Agreement or Broker Agreement, if applicable, as applicable, and shall not permit any of its Authorized Users to disclose the Password to any Person, other than the Authorized Users, or permit any Person, other than the Authorized Users, to use the Account, the Password or LIS Market.
(b) LIS Market Participant shall be solely responsible for the safeguarding, security and confidentiality of the Account and the Password and shall be responsible for all use, activities and transactions associated with or arising from LIS Market Participant’s or its Authorized Users’ access to, and/or use of, LIS Market. LIS Market Participant shall notify LIS Market in writing if (i) any Authorized User’s access is suspended or terminated; (ii) any Password is lost or stolen or has been, or reasonably could be expected to be, accessed or used by an unauthorized user; or (iii) LIS Market Participant believes the confidentiality of part or all of the Password has been compromised in any way. Following receipt of notice of suspension or termination of an Authorized User by LIS Market Participant, LIS Market shall terminate such Authorized User’s access to LIS Market. LIS Market shall have no liability to Participant or any Person for any unauthorized use of Participant’s Account or Password.
(c) LIS Market Participant shall implement and enforce procedures sufficient to ensure that all transactions related to LIS Market Participant’s access to, and/or use of, LIS Market comply in all respects with Applicable Law. LIS Market Participant shall implement and enforce procedures governing authorized access and verification of the accuracy of information submitted to LIS Market.
(d) LIS Market Participant accepts responsibility for all information submitted through LIS Market through the Account or using the Password or otherwise. In the event that information is submitted through the Account to LIS Market erroneously, or LIS Market Participant later determines that information should not have been submitted, for any reason, LIS Market Participant accepts full liability and financial responsibility for such submission.
III-3. Prohibition or Limitation on Participation Privileges
(a) LIS Market may deny the grant of Participation Privileges where a LIS Market Participant has failed to meet any requirements for such grant.
(b) LIS Market may deny or condition the grant of Participation Privileges if such Person: (i) is unable satisfactorily to demonstrate a capacity to adhere to all applicable Rules; (ii) would bring LIS Market into disrepute; or (iii) for such other cause as LIS Market reasonably may decide.
(c) LIS Market may determine not to permit a LIS Market Participant to keep its Participation Privileges or may condition such participation or association, as the case may be, if such LIS Market Participant or its Authorized Users: (i) fails to meet any of the qualification requirements for Participation Privileges or association after such Participation Privileges or association have been approved; (ii) fails to meet any condition placed by LIS Market on such participation or association; or (iii) violates any agreement with LIS Market.
(d) LIS Market may at any time suspend, revoke, limit, condition, restrict or qualify the Participation Privileges of any LIS Market Participant or Authorized User if, in the sole discretion of LIS Market , such action is in the best interests of LIS Market.
Each LIS Market Participant shall prepare and keep current all books, ledgers and records required to be kept by it pursuant to Applicable Law.
III-5. Fraudulent or Misleading Communications
No LIS Market Participant shall make any fraudulent or misleading communications relating to the listing, purchase or sale of any Listed Policy.
III-6. Recording of Communications
LIS Market may (but shall not be obligated to) record conversations and retain copies of electronic communications between officers, employees or agents of LIS Market, on one hand, and LIS Market Participants and Authorized Users, on the other hand. Any such recordings may be retained by LIS Market in such manner and for such periods of time as LIS Market may deem necessary or appropriate.
III-7. Participant and LIS Market Transaction Information
LIS Market has the right to use all data and information submitted or collected by LIS Market and to copy, store, transmit and to sell, dispose of, hypothecate or otherwise exploit such data and information in any manner it deems desirable and by any means or method of communication, whether now known or hereafter devised. LIS Market may record and observe transactions and activity on LIS Market to assist in providing and maintaining LIS Market, however, LIS Market does not undertake any obligation to record or observe any or all transactions or activities. Subject to maintaining the confidentiality of the parties thereto, LIS Market shall have the right to use any such data and information, whether in its original form or as compiled or configured by LIS Market or otherwise, and all derivatives thereof shall be the sole and exclusive property of LIS Market, and no LIS Market Participant shall have any ownership or other rights therein or to obtain or receive any such data or information from LIS Market. LIS Market shall have the right to identify Participant as a user of the System.
III-8. Confidentiality
LIS Market Participants may receive confidential information relating to LIS Market, its Affiliates or the systems, processes, structure, or strategies (including, but not limited to, prices contained on LIS Market) of LIS Market that LIS Market maintains as confidential. LIS Market Participant shall protect such information to the same degree it protects its own, and shall use the information only as permitted herein. This obligation shall not extend to any information that (a) is known by a LIS Market Participant prior to receiving it from LIS Market or its Affiliates; (b) is in the public domain or becomes generally known to the public by some action other than breach of this Rule III-8; (c) is received from a third party without obligation of confidentiality; or (d) is independently developed by the LIS Market Participant. LIS Market Participant’s obligations under this Rule III-8 shall extend for a period of two (2) years from termination, expiration or cancellation of LIS Market Participant’s participation in LIS Market, except to the extent applicable trade secret law requires the obligation to continue. This confidentiality obligation shall supersede all prior confidentiality or nondisclosure agreements that might affect the information disclosed in connection with participation in LIS Market.
III-9. Privacy Obligations
LIS Market Participant acknowledges and agrees that in the course of its participation in LIS Market, LIS Market Participant may receive Confidential Policy Identification Information including (a) Protected Health Information regarding Policy Owners and/or Insureds from Covered Entities and Business Associates (as such terms are defined by the HIPAA Privacy Regulations) and (b) Non-Public Personal Information, including, without limitation, Policy Owners’ and/or Insureds’ data and financial information. LIS Market Participant shall use such Confidential Policy Identification Information solely in connection with its participation in LIS Market. LIS Market Participant shall abide by all agreements between LIS Market Participant and any third party regarding any use, maintenance or disclosure by LIS Market Participant of any Confidential Policy Identification Information associated with a Listed Policy.
III-10. Non-Circumvention
(a) No LIS Market Participant will, directly or indirectly, offer to sell, solicit any offers to buy outside the Exchange, or offer to buy or solicit any offers to sell outside the Exchange involving a Listed Policy so long as such Listed Policy remains listed on the System or in respect of which an offer to purchase has already been accepted on the System by the applicable Seller Participant or Seller Participant Agent or an offer to sell has already been accepted on the System by the applicable Buyer Participant or Buyer Participant Agent.
(b) If LIS Market Participant violates its obligations under this Rule III-10 or under the Participant Agreement with respect to any Listed Policy, LIS Market Participant shall pay to LIS Market as liquidated damages the amount of the LIS Market Service Fee, calculated as follows: the Seller Reserve Price for the Listed Policy multiplied by 125% multiplied by the then-existing LIS Market Service Fee pursuant to the LIS Market Service Fee Schedule, plus reasonable attorneys’ fees incurred in collecting the LIS Market Service Fee and enforcing this provision. LIS Market and LIS Market Participant agree that such liquidated damages amount is not a penalty but rather compensation due hereunder.
Each addition to, modification of, or clarification of, the Rules or of any action to implement any Rules, shall be published by LIS Market on the LIS Market website or any other reasonable means designed to enable each LIS Market Participant and Authorized User to become aware of and familiar with, and to implement, any necessary preparatory measures to be taken by it with respect to, such addition or modification, prior to the effective date thereof. Notwithstanding any of the foregoing, any addition, change or modification to the Rules shall be effective immediately upon publication on the LIS Market website.
Any notice required to be given to LIS Market by each LIS Market Participant and its Authorized User shall be in writing and by contacting LIS Market as directed on its website.
CHAPTER IV
LIS Market shall determine which Policies are approved for Auction or listing on LIS Market and may approve rules containing the specifications for or with respect to such Policies and any matters pertaining thereto.
IV-2. Secondary Policies – Eligibility
(a) Each Secondary Policy to be listed on LIS Market shall be an in-force, non-variable, life insurance policy which insures the life of an individual who:
(i) has not been diagnosed with any medical illness or condition that will reasonably be expected to result in a life expectancy of twenty-four (24) months or less;
(ii) is able to perform at least all but one of the following activities of daily living: eating, toileting, transferring, bathing, dressing, and continence, and has not been determined by any state health official to have any disability related to these activities of daily living; and
(iii) does not require substantial supervision to protect himself/herself from threats to health and safety due to severe cognitive impairment.
(b) Each Secondary Policy to be listed on LIS Market shall be authorized by the applicable Policy Owner to be listed by the Broker pursuant to a Broker Agreement.
IV-3. Secondary Policies – Licensed Broker
Each party appointed and authorized by a Policy Owner to represent and act on behalf of the Policy Owner pursuant to a Broker Agreement with respect to a Regulated Policy must be a Licensed Broker as required by Applicable Law.
IV-4. Secondary Policies –Licensed Broker—Approval
(a) Any access to, and/or utilization of, LIS Market by a Licensed Broker or its Authorized Users is subject to the prior approval by LIS Market, in its sole and absolute discretion,
(b) Licensed Broker shall submit to LIS Market an executed Broker Agreement with Policy Owner.
(c) LIS Market expressly reserves the right to conduct, from time to time, a due diligence investigation during the term of each Licensed Broker’s participation in LIS Market.
(d) LIS Market may terminate immediately at any time, in its sole and absolute discretion, the right of a Licensed Broker and any of its Authorized Users to participate in LIS Market based on the results of any due diligence investigation.
IV-5. Secondary Policies – Policy Information Listing
Listing Agent shall deliver to LIS Market and, at LIS Market’s instruction, make available to a Buyer Participant Policy Listing Information for each Secondary Policy, which shall include:
(a) Required Policy Listing Information:
(i) Broker Agreement;
(ii) Broker Authorization, if necessary under Applicable Law;
(iii) Policy Summary;
(iv) Life Settlement Questionnaire, including information on insurable interest, premium finance and medical history on Insured;
(v) Life Insurance Policy Owner’s Disclosure of Liens;
(vi)_ In-Force Policy Illustration; and
(b) Copy of Policy;
(c) Medical Records
(d) Authorization of Insured for Use and Disclosure of Non-Public Personal Information for Effectuation of a Secondary Transaction;
(e) Authorization for Disclosure of Protected Health Information;
(f) Policy Owner’s and Insured’s Authorization for Disclosure of Life. Insurance Policy Information;
(g) Notice of Request for Life Expectancy Report, if applicable; and
(h) Such other documents that LIS Market may from time to time may require Licensed Broker to provide.
IV-6. Tertiary Policies – Policy Information Listing
Seller Participant or Seller Participant Agent shall deliver to LIS Market and, at LIS Market’s instruction, make available to a Buyer Participant Policy Listing Information for each Tertiary Policy, which includes:
(a) Required Policy Listing Information:
(i) Policy Summary;
(ii) Life Settlement Questionnaire, including information on insurable interest, premium finance and medical history on Insured;
(iii)_ In-Force Policy Illustration; and
(iv) Verification of Coverage
(b) Copy of Policy
(c) Notice of Request for Life Expectancy Report, if applicable;
(d) Medical Records; and
(e) Such other documents that LIS Market may from time to time may require Participant to provide.
CHAPTER V
LIS Market shall, in its sole and absolute discretion, establish, amend, supplement or remove, from time to time, rules and methodology for conducting Auctions, including, without limitation, duration of the Bidding Period. In addition to any emergency or other powers vested in the LIS Market Administrator, the LIS Market Administrator may, in its sole and absolute discretion, prior to the initiation, or during the Bidding Period, change any practice, policy, process, protocol or Rule relating to any Auction, including, without limitation, the length of the Bidding Period, so long as any such change is uniformly applied with respect to all Bidders and the Auction remains a fair and transparent Auction.
V-2. Execution of Participant Agreement; Closing Procedures.
(a) Contemporaneously with the execution of the Participant Agreement, Participant shall inform LIS Market of its, or if the Participant will be using a Provider to close transactions on LIS Market, its Provider’s, closing procedures in connection with the purchase and sale of Listed Policies.
(b) Participant shall inform LIS Market of Participant’s Escrow Agent to be used in connection with closings of Listed Policy transactions. The Escrow Agent’s designation by the Participant shall be subject to LIS Market’s approval in LIS Market’s sole discretion. Participant shall establish an account with its Escrow Agent through which Participant will deposit the Escrow Fund Price, an amount including the Closing Price, LIS Market Fee and escrow fee, applicable to the purchase of a Listed Policy purchased through LIS Market and enter into any other agreement that LIS Market may from time to time require to insure compliance by the Participant and/or the Participant Escrow Agent with the terms of the Participant Agreement and the Rules, including an Escrow Agreement, the form of which is attached hereto as Appendix D.
V-3. LIS Market Policy Information
Each LIS Market Participant will have access to the LIS Market Policy Information contained on LIS Market, as determined by LIS Market Administrator in accordance with its position as a Seller Participant or Seller Participant Agent; or Buyer Participant or Buyer Participant Agent.
(a) The Bidding Period for each Listed Policy will commence on the day LIS Market Administrator determines, in its sole discretion, that the Required Policy Listing Data for such Listed Policy is complete. All other documents or data that comprise the Policy Listing Information must be submitted to the System prior to the Close of the Transaction.
(b) LIS Market may, in its sole and absolute discretion, immediately terminate the Bidding Period for any Listed Policy. A Seller (acting through a Provider or Seller Participant Agent ) may, at any time during the Bidding Period, subject to LIS Market’s approval, which may be withheld at LIS Market’s sole and absolution discretion, lower the Seller’s Reserve Price. .
(c) If, at any time, the System shall incur or suffer a technological or other infrastructure or system failure or breakdown causing the interruption of bidding on the last trading day of any Bidding Period, the LIS Market Administrator may, in its sole and absolute discretion, extend the Bidding Period for any length of time that the LIS Market Administrator deems to be necessary, in its sole discretion, to provide Participants a fair opportunity to bid or to insure an fair and orderly Auction. These powers granted to the LIS Market Administrator shall be in addition to powers granted to it pursuant to Rule V-9 in connection with an Emergency.
V-5. Bidding Process
(a) Participant or its Authorized User may submit Bids with respect to a Listed Policy during the Bidding Period. Bids submitted are binding on Participant, unless LIS Market Administrator approves the cancellation or withdrawal of such Bid, in Administrator’s sole and absolute discretion or as otherwise provided under the terms of the Participation Agreement.
(b) LIS Market or LIS Market Administrator has authority and power, in its sole and absolute discretion, to temporarily or permanently, and in whole or in part, interrupt, terminate or otherwise modify the submission, processing, acceptance, continuance or status of any Bid by a Participant during the Listed Policy’s Bidding Period.
(c) Tie Bids
If more than one Participant places the same Bid, the Buyer Participant or Buyer Participant Agent may designate a Selected Bid in its sole discretion.
(d) Secondary Policy
If Participant submits a Selected Bid for a Listed Secondary Policy, (i) System shall automatically generate and deliver a Confirmation to the Participant and the Seller Participant; and (ii) LIS Market shall close the Auction or trading for such Listed Secondary Policy upon delivery of a Confirmation.
(e) Tertiary Policy
If a Selected Bid is submitted for a Listed Tertiary Policy, (i) System shall automatically generate and deliver a Confirmation to each of the Seller Participant or Seller Participant Agent, as applicable and the Buyer Participantor Buyer Participant Agent, as applicable, and (ii) LIS Market shall close the Auction or trading for such Listed Tertiary Policy upon delivery of a Confirmation.
(f) The Confirmation shall include the following:
(i) LIS Market Policy Information;
(ii) Closing Price;
(iii) LIS Market Service Fee; and
(iv) Other fees and expenses related to the transaction, including any commissions to be paid to a Broker or Seller Participant Agent.
(g) Within the time period set forth under the Participation Agreement or such other time period as mutually agreed upon by the Buyer and Seller, Participant will deliver to LIS Market confirmation from the Participant Escrow Agent that immediately available funds have been received by the Participant’s Escrow Agent (or that such funds are available and that the Participant is ready, willing and able to deposit those funds with the Escrow Agent at the appropriate time in accordance with the Participant’s closing procedures) in an amount equal to the Closing Price plus any expenses incurred by Participant in connection with the Auction.
(h) Seller Participant shall remain responsible for all premium payments due subsequent to the close of an Auction and up to the Closing Date, and any required premium payments that are not made by Seller shall be deducted at the Closing from the Closing Price.
V-6. Business Days and Bidding Hours
(a) LIS Market shall from time to time determine (i) the Business Days during any particular calendar year and (ii) the Bidding Hours, with respect to any Listed Policy. All time references shall be based on local time prevailing in The City of New York, New York. Opening times start on the first second of the minute cited. Closing times end on the last second of the minute cited.
(b) Participants and Authorized Users may make any Bid or offer for, or engage in any transaction in, any Listed Policy before or after such hours, provided that such Bid or offer shall be deemed made at the opening time of the next Business Day.
(c) The Business Days and Bidding Hours are established as Monday – Friday, from 8 a.m. and 8 p.m. (EST).
(a) If LIS Market declares that any transaction for any Policy is a Terminated Transaction by reason of the Buyer Participant’s failure to perform its obligations hereunder, LIS Market shall have the right to declare a Selected Bid, as the next highest Bid or Bid most similar to the Bid, which was selected by Seller Participant or Seller Participant Agent, upon notice to such Seller Participant or such Seller Participant Agent.
(b) If LIS Market declares a Selected Bid as outlined above, the Participant shall have three (3) Business Days following LIS Market’s notice that such Participant’s Bid is the Selected Bid to deposit the applicable Closing Price with the Participant Escrow Agent. If such Participant fails to make such deposit within such three (3) Business Day period, LIS Market shall continue the process of declaring a Selected Bid. .
V-8. Emergencies
In the event of an Emergency, the President or any individual designated by the President and approved by the Board of Directors, may place into immediate effect a temporary emergency rule, which may remain in effect for up to 30 Business Days and which may provide for, or may authorize the Board of Directors or any committee thereof to undertake, actions necessary or appropriate to respond to the Emergency.
CHAPTER VI
VI-1. Secondary Sale Documents
(a) Within such time period designated under the Participation Agreement (or such later time determined by LIS Market in its sole discretion,, the Buyer Participant shall deliver to the Broker and LIS Market all Secondary Sale Documents. Broker shall furnish Secondary Sale Documents to Policy Owner for its execution. Upon execution, the Broker shall deliver the Secondary Sale Documents to LIS Market, Provider and Escrow Agent, as outlined in the Participation Agreement,. Provider shall deliver such documents to the Buyer for review and approval in accordance with Buyer ’s closing procedures previously approved by LIS Market.
(b) Upon satisfactory verification by the Provider of the executed Secondary Sale Documents, the Provider shall deliver the executed Secondary Sale Documents to the Escrow Agent to be held in escrow pending closing of the Secondary Transaction.
(c) All forms of Secondary Sale Documents shall be supplied by Provider, subject to approval by LIS Market.
VI-2. Closing of Secondary Transaction
On the Closing Date of each Secondary Transaction:
(a) The Escrow Agent shall deliver the applicable change of ownership and beneficiary forms to the Buyer Participant.
(b) The Escrow Agent shall disburse the Net Secondary Sale Proceeds to the Policy Owner and LIS Market Service Fee to LIS Market pursuant to the Secondary Sale Proceeds Disbursement Instruction. The Listing Commission, if any, shall not be paid into Escrow and shall be disbursed to Broker pursuant to the terms and conditions of its Broker Agreement or as mutually agreed upon by the parties to the Transaction. .
(c) To the extent that the Provider utilizes particular closing procedures and practices, such closing procedures and practices shall govern the closing of the Secondary Transaction, subject to the prior consent of the LIS Market Administrator, at its sole discretion; provided, however, to the extent that Applicable Law requires that the Broker or the Provider comply with any additional or conflicting procedures or practices in connection with the closing of a Secondary Transaction, the procedures and practices mandated by Applicable Law shall govern the closing.
PURCHASE AND SALE OF TERTIARY POLICIES
VII-1. Verification and Closing Process
Within such time period designated under the Participation Agreement (or such later time determined by LIS Market in its sole discretion,) \ following delivery of a Confirmation by LIS Market, the Buyer Participant or Buyer Participant Agent, as applicable, shall deliver all closing documents and forms required to be executed by the Seller in accordance with the closing procedures established by the Buyer Participant or Buyer Participant Agent, as applicable and approved by LIS Market, but which at a minimum must include a Purchase and Sale Agreement and Escrow Agreement. Upon execution, the Seller Participant or Seller Participant Agent shall deliver the closing document and other forms to LIS Market, Escrow Agent and Buyer Participant or Buyer Participant Agent,, which shall deliver such documents to the Buyer for review and approval in accordance with Buyer’s closing procedures.
VII-2. Closing of Purchase and Sale of a Tertiary Policy
On the Closing Date of each sale and purchase of a Tertiary Policy:
(a) The Participant’s Escrow Agent shall disburse to Seller Participant, an amount equal to the Closing Price, net of any LIS Market Services Fees or other fees payable to LIS Market, pursuant to Disbursement Instructions provided to the Participant’s Escrow Agent and approved by LIS Market.
(c) To the extent that the Participants utilize particular closing procedures and practices, such closing procedures and practices shall govern the closing of the sale of the Tertiary Policy, and use Closing Documents subject to the prior consent of the LIS Market Administrator at its sole discretion.
CERTAIN RULES CONCERNING LISTED POLICIES
(a) Prior to the close of any Auction, the following shall not be disclosed, except to LIS Market: ((i) the identities of Participants that Bid on the Policy and the Broker or Seller Participant Agent thereof; provided, however, that at the request of a Buyer Participant, LIS Market may, in its discretion, provide a list of all Seller Participants and Seller Participant Agents and advise such Buyer Participant of Policies listed by such Seller Participants or such Seller Participant Agents which are objectionable to such Buyer Participant.
(b) Unless a Policy Owner and/or an Insured has expressly elected to not have such Policy Identification Information disclosed, the Policy Identification Information regarding Policy Owners and/or Insureds of Listed Policies shall be provided to Buyer Participant or Buyer Participant Agent during the Bidding Period as long as such Buyer Participant or Buyer Participant Agent has a privacy policy that LIS Market determines in its sole discretion reasonably protects the confidentiality and privacy of Insureds and/or Policy Owners.
(c)
VIII-2. Custody of Listed Policies Acquired by Participant
(a) Each Listed Policy acquired by Participant and the related Policy File shall be delivered to and held by the Participant or any custodian designated by Participant.
(b) If a Tertiary Policy is held by a custodian on behalf of the Seller Participant, the Escrow Agent shall instruct the Seller Participant’s custodian to deliver such Tertiary Policy to the applicable Buyer Participant or the Buyer Participant’s custodian.
LIS Market may, in its sole and absolute discretion, establish and amend a procedures manual, and condition the purchase, sale, closing and transfer of any Listed Policy on the completion of the processes and measures contained in such procedures manual.
No LIS Market Participant will violate any Rule regulating the conduct or business of a LIS Market Participant, or any agreement made with LIS Market, or engage in fraud, dishonorable or dishonest conduct, or in conduct which is inconsistent with just and equitable principles of trade.
(a) Neither a LIS Market Participant nor any of its Authorized Users, directors, officers or employees shall engage in any fraudulent act or engage in any scheme to defraud, deceive or trick in connection with or related to any listing, Bid, Auction or other activity related to LIS Market.
(b) Each LIS Market Participant has an affirmative duty and obligation under, and shall comply with, the laws of certain states that are applicable to each LIS Market Participant to conduct an anti-fraud review of proposed Secondary Transactions and to report to state insurance regulatory authorities any suspected fraud, misrepresentation or violation of applicable insurance laws or regulations by any LIS Market Participant, Policy Owner, life insurance agent or LE Company in connection with a Secondary Transaction.
IX-3. Anti-Money Laundering
Participant shall take all reasonable measures, in accordance with all applicable Anti-Money Laundering Laws, to assure that funds used to purchase any Listed Policy by Participant are derived from legal sources. None of Participant, its Authorized Users nor any financing entity of Participant shall (a) be under investigation by any Governmental Authority for, or have been charged with, or convicted of, any violation of any Anti-Money Laundering Laws, or drug trafficking, terrorist-related activities or other money laundering predicated crimes or a violation of BSA, (b) have been assessed civil penalties under these or related laws, or (c) have had any of its funds seized or forfeited in an action under these or related laws.
IX-4. OFAC Laws and Regulations
Participant shall immediately notify LIS Market in writing if any individual or entity owning directly or indirectly any interest in Participant or any financing entity of Participant, or any director, officer, member, manager or partner of any of such holders is an individual or entity (a) whose property or interests are subject to being blocked under any of the OFAC Laws and Regulations; (b) is otherwise in violation of any of the OFAC Laws and Regulations; (c) is under investigation by any Governmental Authority for, or has been charged with, or convicted of, drug trafficking, terrorist-related activities or any violation of Anti-Money Laundering Laws; (d) has been assessed civil penalties under these or related laws or regulations; or (e) has had funds seized or forfeited in an action under these or related laws or regulations.
Neither any LIS Market Participant nor any of its Authorized Users, directors, officers or employees shall create fictitious transactions or execute any such listing or Bid with knowledge of its nature.
(a) Listing or Bids entered into LIS Market for the purpose of upsetting the market or creating a condition in which prices do not or will not reflect fair market values are prohibited, and any LIS Market Participant and any of its directors, officers or employees who makes or assists in entering any such listing or Bid with knowledge of the purpose thereof or who, with such knowledge, in any way assists in carrying out any plan or scheme for the entering of any such listing or Bid, will be deemed to have engaged in an act detrimental to LIS Market.
(b) If, upon conclusion of any Bidding Period with respect to an Auction in which the Selected Bid has equaled or exceeded the Seller Reserve Price, the Policy Owner does not proceed to close the sale of the Listed Policy for reasons which, in the sole discretion of the LIS Market Administrator, are arbitrary and capricious and may have the effect of undermining the integrity of LIS Market, the LIS Market Administrator may, by notice to the Policy Owner and the Seller Participant Agent: (i) demand payment of liquidated damages from Policy Owner in an amount equal to the LIS Market Service Fee that would otherwise have been paid to LIS Market upon closing of the sale of the Listed Policy. If Policy Owner fails to pay the LIS Market Service Fee within ten (10) business days from the date of the demand, the Policy Owner shall be obligated to pay LIS Market the costs of collection, including, without limitation, reasonable attorneys’ fees and expenses, in addition to the LIS Market Service Fee.
Any manipulation of the market in any Listed Policy is prohibited.
IX-8. Prohibition of Misstatements
Neither a LIS Market Participant nor any of its Authorized Users, directors, officers, or employees shall make any misstatement of a material fact to LIS Market (including its Board of Directors, any committee or panel thereof, or any representative of LIS Market or LIS Market Administrator).
No LIS Market Participant, Authorized User or any directors, officers, employees or related Persons will engage in conduct in violation of Applicable Laws or in violation of the Rules.
IX-10. Use of Participation Privileges
No LIS Market Participant, Authorized User or any of its directors, officers, employees or related Persons may use its Participation Privileges or access LIS Market in any way which could be expected to bring disrepute upon LIS Market.
Each LIS Market Participant shall be responsible for establishing, maintaining and administering reasonably supervisory procedures to ensure that its Authorized Users, officers, employees and agents comply with Applicable Law and Rules, and may be held accountable for the actions of such officers, employees, agents and Authorized Users. In addition, each LIS Market Participant shall be responsible for supervising its officers, employees and agents (including its Authorized Users, if any) and may be held accountable for the actions of such officers, employees and agents.
IX-12. Summary Suspensions and Other Summary Actions
Notwithstanding anything in the Rules or Participation Agreement to the contrary, the LIS Market may summarily suspend the Participation Privileges of any LIS Market Participant or Authorized User.
Except as otherwise provided in the Rules, Applicable Laws or the Participation Agreement, LIS Market Participants shall arbitrate all controversies arising in connection with LIS Market business between or among themselves, or between themselves and LIS Market and applicable Policy Owners pursuant to the terms and conditions of the Arbitration provision of the Participation Agreement signed by Participant.
X-2. Limitation of Liability
EXCEPT AS OTHERWISE PROVIDED, AND EXCEPT IN INSTANCES WHERE THERE HAS BEEN A FINDING OF WILLFUL OR WANTON MISCONDUCT, IN WHICH CASE THE PARTY FOUND TO HAVE ENGAGED IN SUCH CONDUCT CANNOT AVAIL ITSELF OF THE PROTECTIONS IN THIS RULE X-2, NEITHER LIS MARKET (INCLUDING ITS AFFILIATES AND ANY CONTRACTORS AND SUB-CONTRACTORS PROVIDING SERVICES TO LIS MARKET) NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS SHALL BE LIABLE TO ANY OTHER PERSON, INCLUDING ANY LIS MARKET PARTICIPANT, FOR ANY LOSSES, DAMAGES, COSTS OR EXPENSES (INCLUDING LOSS OF PROFITS, LOSS OF USE, DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES), ARISING FROM (A) ANY FAILURE OR MALFUNCTION, INCLUDING ANY INABILITY TO ENTER OR CANCEL ORDERS, OF LIS MARKET OR ANY SERVICES OR FACILITIES USED TO SUPPORT LIS MARKET, OR (B) ANY FAULT IN DELIVERY, DELAY, OMISSION, SUSPENSION, INACCURACY OR TERMINATION, OR ANY OTHER CAUSE, IN CONNECTION WITH THE FURNISHING, PERFORMANCE, MAINTENANCE, USE OF OR INABILITY TO USE ALL OR ANY PART OF LIS MARKET OR ANY SERVICES OR FACILITIES USED TO SUPPORT LIS MARKET. THE FOREGOING SHALL APPLY REGARDLESS OF WHETHER A CLAIM ARISES IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE. FURTHERMORE, THERE SHALL BE NO LIABILITY BASED UPON, OR IN CONNECTION WITH, ANY BID OR OTHER INFORMATION IF NO CORRELATIVE SECONDARY TRANSACTION IS MADE, AND IF A CORRELATIVE SECONDARY TRANSACTION IS MADE, ANY LIABILITY SHALL BE LIMITED IN AMOUNT TO THE AGGREGATE PRICE OF THE POLICIES PURCHASED.
THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OR REPRESENTATIONS PROVIDED BY LIS MARKET (INCLUDING ITS AFFILIATES AND ANY CONTRACTORS AND SUBCONTRACTORS PROVIDING SERVICES TO LIS MARKET), RELATING TO LIS MARKET OR ANY SERVICES OR FACILITIES USED TO SUPPORT LIS MARKET, INCLUDING WARRANTIES OF MERCHANTABILITY AND WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR USE. THE SERVICES OF LIS MARKET ARE BEING PROVIDED ON AN “AS IS” BASIS AT LIS MARKET PARTICIPANT’S SOLE RISK. NEITHER LIS MARKET (INCLUDING ITS AFFILIATES AND ANY CONTRACTORS AND SUBCONTRACTORS PROVIDING SERVICES TO LIS MARKET) NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS MAKE ANY WARRANTY WITH RESPECT TO, AND NO SUCH PARTY SHALL HAVE ANY LIABILITY TO ANY LIS MARKET PARTICIPANT FOR, THE ACCURACY, TIMELINESS, COMPLETENESS, RELIABILITY, PERFORMANCE OR CONTINUED AVAILABILITY OF LIS MARKET, DELAYS, OMISSIONS OR INTERRUPTIONS IN LIS MARKET OR THE CREDITWORTHINESS OF ANY OTHER LIS MARKET PARTICIPANT. LIS MARKET SHALL HAVE NO DUTY OR OBLIGATION TO VERIFY ANY INFORMATION DISPLAYED ON LIS MARKET OR OTHERWISE. EACH LIS MARKET PARTICIPANT ACKNOWLEDGES AND AGREES THAT LIS MARKET (INCLUDING ITS AFFILIATES AND ANY CONTRACTORS AND SUBCONTRACTORS PROVIDING SERVICES TO LIS MARKET) DOES NOT AND SHALL NOT SERVE AS THE BASIS FOR ANY DECISIONS MADE BY SUCH LIS MARKET PARTICIPANT AND IS NOT AN ADVISOR OR FIDUCIARY OF SUCH LIS MARKET PARTICIPANT.
ANY DISPUTE ARISING OUT OF THE USE OF LIS MARKET OR SERVICES OR FACILITIES USED TO SUPPORT LIS MARKET IN WHICH LIS MARKET (INCLUDING ITS AFFILIATES AND ANY CONTRACTORS AND SUBCONTRACTORS PROVIDING SERVICES TO LIS MARKET) OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS IS A PARTY SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE CONFLICT OF LAWS PRINCIPLES. ANY ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE FOREGOING MUST BE BROUGHT WITHIN TWO YEARS FROM THE TIME THEY FIRST ARISE, AND ANY SUCH ACTION, SUIT OR PROCEEDING MUST BE BROUGHT IN THE 17TH JUDICIAL CIRCUIT, BROWARD COUNTY, FLORIDA AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA, MIAMI DIVISION AS THE SOLE AND EXCLUSIVE VENUE. THIS PROVISION SHALL IN NO WAY CREATE A CAUSE OF ACTION AND SHALL NOT AUTHORIZE ANY ACTION THAT WOULD OTHERWISE BE PROHIBITED BY THE RULES OR THE PARTICIPATION AGREEMENT SIGNED BY PARTICIPANT. LIS MARKET PARTICIPANT EXPRESSLY AGREES TO THE EXCLUSIVE VENUE, CHOICE OF LAW AND STATUE OF LIMITATIONS PROVISIONS SET FORTH IN THIS PARAGRAPH, AND EXPRESSLY AND IRREVOCABLY WAIVES ANY DEFENSE (INCLUDING FORUM NON CONVENIENS) RELATING THERETO.
NO LIS MARKET PARTICIPANT, AUTHORIZED USER OR PERSON ASSOCIATED WITH A LIS MARKET PARTICIPANT WILL INSTITUTE A LAWSUIT OR OTHER LEGAL PROCEEDING AGAINST LIS MARKET OR ANY DIRECTOR, COMMITTEE MEMBER, OFFICER, EMPLOYEE, AGENT OR CONTRACTOR OF LIS MARKET (INCLUDING ITS AFFILIATES), FOR ACTIONS TAKEN OR OMITTED TO BE TAKEN IN CONNECTION WITH THE OFFICIAL BUSINESS OF LIS MARKET (INCLUDING ITS AFFILIATES).
ANY LIS MARKET PARTICIPANT, AUTHORIZED USER OR PERSON ASSOCIATED WITH A LIS MARKET PARTICIPANT OR USER WHO FAILS TO PREVAIL IN A LAWSUIT OR OTHER LEGAL PROCEEDING INSTITUTED BY SUCH PERSON AGAINST LIS MARKET (INCLUDING ITS AFFILIATES) OR ANY OF ITS DIRECTORS, COMMITTEE MEMBERS, OFFICERS, EMPLOYEES, AGENTS OR CONTRACTORS, AND RELATED TO THE BUSINESS OF LIS MARKET, WILL PAY TO LIS MARKET ALL REASONABLE EXPENSES, INCLUDING REASONABLE ATTORNEYS’ FEES, COSTS AND DISBURSEMENTS, INCURRED BY LIS MARKET OR THE ABOVE-REFERENCED PERSONS IN THE DEFENSE OF SUCH PROCEEDING.
NOTWITHSTANDING ANY OF THE FOREGOING PROVISIONS, THIS RULE X-2 SHALL IN NO WAY LIMIT THE LIABILITY OF ANY PERSON ARISING FROM ANY VIOLATION OF SUCH PERSON OF LAWS AND REGULATIONS UNDER ANY APPLICABLE JURISDICTIONS.
X-3. Indemnification of LIS Market
Each LIS Market Participant shall reimburse, indemnify and hold harmless LIS Market, its Affiliates, and their respective owners, partners, shareholders, directors, officers, employees, agents and independent contractors (the “LIS Market Indemnified Parties”) from, against and in respect of, any and all actions, suits, claims, interest, penalties, proceedings, investigations, audits, demands, losses (direct or indirect), liabilities, damages, assessments, fines, judgments, costs and expenses (including, without limitation, reasonable attorneys’ fees and disbursements) incurred by, imposed upon, or asserted against, any of the LIS Market Indemnified Parties that result from: (a) inaccuracy in or breach of any representations or warranties made by the LIS Market Participant or its Authorized Users in connection with any agreement, instrument, certificate or other information provided or delivered to LIS Market, a LIS Market Participant or any other third party in connection with, or relating to, the listing, sale or purchase of a Policy or its activities as a LIS Market Participant; (b) breach or violation of the Rules; (b) breach of any covenant or agreement of the LIS Market Participant under the agreements or instruments contemplated in the Rules or in connection with the listing, sale or purchase of a Policy; (c) violation by the LIS Market Participant or the Authorized Users of any law or regulation or the rights of a third party; (e) claims, litigation or proceedings which relate or are due to the conduct of the LIS Market Participant or its Authorized Users; (f) claims made by a third party, including, without limitation, LIS Market Participants or Policy Owners, alleging facts which, if true, would entitle the LIS Market Indemnified Parties to indemnification pursuant to (a) through (e) above; and (g) fees or expenses (including, without limitation, reasonable attorneys’ fees and expenses and costs of investigation) incurred by the LIS Market Indemnified Parties in enforcing their rights hereunder.
XI-1. LIS Market Service Fees; Additional Fees
The LIS Market Service Fees shall be paid to LIS Market in accordance with the LIS Market Service Fee set forth on the Fee Schedule at Appendix A.
Appendix A
LIS Market is entitled to a service fee in the amount of 15% of the offer/Bid amount of a Policy listed and sold by a Participant to a Participant on LIS Market.