Victims of NorthStar (Bermuda) Fallout May File Claims through FINRA to Recover Losses

Chicago-based Stoltmann Law Offices continues to hear from investors who’ve suffered losses from dealing with financial advisor who sold them annuity products from Bermuda-based Northstar Financial Services. Northstar filed for bankruptcy last year. Investors have been filing claims as the company is being liquidated by the Bermuda Monetary Authority. Investors across the world are filing claims against Northstar and the many brokerage/financial firms that sold these “annuities” to investors.

One Japanese investor, for example, contends her “Bancwest Investment Services broker proposed a Northstar investment rather than keeping her money in savings and checking accounts.” She is just one of many investors who are filing claims against brokers through FINRA Dispute Resolution, charging they unsuitably recommended and sold Northstar’s fixed- and variable-rate annuity and other products that proved to be unsafe.

“Investors in Northstar Financial wanted their money and the company was unable to pay liquidation or redemption requests,” according to David Fox in the Royal Gazette. “The company was estimated to have incurred a deficit upwards of $260 million. By September 2020 they were reporting just $8 million in assets, and they filed for bankruptcy protection in 2020.”

Northstar paid high commissions, bonuses and other incentives to financial advisors for pushing their annuity products. Since the broker compensation was so lucrative, they often overlooked the suitability of the investment for clients interested in preserving principal. Fees and other expenses usually make these products a bad deal for investors.

In addition, Northstar pitched “segregated account protection, generous liquidity terms and a variety of commitment periods, as well as the benefits of a Bermuda trust structure.” While these features had the virtual appeal of account protection and tax advantages, they did not protect investors from the financial failings and misdeeds of the company.

Brokers across the world sold variable annuity products from Northstar Financial Services (Bermuda). Variable annuities combine mutual funds within a “wrapper” of an insurance policy. You can invest in a range of vehicles from bonds to stocks through the funds. When you’re ready to retire, you can “annuitize” the product into monthly payments. When you die, your survivors will be paid a death benefit.

Greg Lindberg, the former owner of Northstar, was indicted on federal wire fraud and bribery charges in 2019. Convicted of those charges, he is currently in prison. The Supreme Court of Bermuda has also issued charges against the company. Lindberg was sentenced to seven years and three months in prison last August and was also ordered to pay a fine of $35,000.

As we previously reported, if you invested in a NorthStar annuity product based on the recommendation of a financial or investment advisor, you may have claims to pursue through the FINRA Arbitration process. Both FINRA and the SEC have strict rules on disclosing risk profiles on all investments sold by brokers and investment advisers. If they fail to fully inform you of downside risk or vet shady companies offering investments, you may have a case in arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!