Vida Longevity Fund Omissions in Offering Materials Class Action

This class action brings suit under the Texas Securities Act (TSA) against a number of parties related to the Vida Longevity Fund, LP, established in 2010. The Fund promised a high rate of return, but the complaint alleges that it was hiding “serious weaknesses in the Funds’s internal processes and procedures…” It claims that these weaknesses should have been disclosed in the offering materials, including the Private Placement Memoranda (PPM), offered to investors.

The class for this action is all persons and entities who bought or otherwise acquired an investment in limited partnership interests in the Fund from an offering, from the beginning of 2017 to the present, and who suffered losses and damages in connection with their transactions in the Fund’s limited partnership interests from the beginning of 2017 to the present.

The Fund is an open-ended fund that invests in life settlements; that is, it buys life insurance policies at a discount, then holds them to term or resells them.

According to the complaint, its objective was “to achieve return of capital plus a cumulative compounded annualized rate of return rate of approximately 8-12%, with low volatility and low correlation with the investment performance of traditional asset classes.” It seemed to have met that objective through 2017.

However, in 2018, its performance began to deteriorate, and in 2020, it had a loss of around 12.5%, which caused losses to the investors. At the time, the Fund passed this off as a one-time loss due to external events.

But at the end of its third quarter in 2020, the complaint says, “the Fund revealed for the first time that its losses were caused by serious weaknesses in the Fund’s internal processes and procedures necessary for the evaluation and pricing of the Fund’s investments, and thus required significant remedial actions.”

The complaint alleges that this was a violation of the TSA because the Fund had misrepresented or not disclosed these serious weaknesses in the offering materials given to investors, which they used to decide whether or not to put their money into the Fund.

It also claims that the Fund’s founder had conflicts of interest, including that one of his alternative investment funds, Ovation Partners, LP. Ovation was first of all a competitor to the Fund, because it also invested in life settlements. More ominously, however, the complaint says it “was also systematically liquidating its $40,000,000 investment in the Fund during 2018 at the same time [the founder] was urging other investors to invest in the Fund.”

The complaint alleges that the omissions in the materials were material to those who were deciding whether or not to invest.

Article Type: Lawsuit
Topic: News
Tags: False or Misleading Information, Investment Losses, Investments, Omitting or Withholding Information