Investors in annuity and insurance products offered by now-bankrupt Northstar Financial Services (Bermuda) Ltd. (Northstar, or the Company) may have claims to recover investment losses. While Northstar investors are unlikely to recover meaningful investment losses through the Company’s bankruptcy liquidation process, they may be able to pursue FINRA arbitration claims against financial advisors who recommended Northstar investment products, in the event that the advisors lacked a reasonable basis for the recommendation to invest, or otherwise misled their client(s) into making the investment without fully disclosing its risk components.

As we have previously discussed, Northstar has been plagued with a series of problems in recent years. Northstar, an offshore insurance company which was acquired by Global Bankers Insurance Group – owned by billionaire businessman Greg E. Lindberg – filed for bankruptcy in 2020. That same year, Lindberg was sentenced to more than seven years in federal prison after being convicted of conspiracy to commit wire fraud and bribery. Northstar is currently undergoing liquidation, but its assets are reported to be inadequate to cover the Company's outstanding liabilities.

Northstar investors purchased annuity and insurance products that, while marketed as safe and low-risk, were actually speculative, risky, and illiquid. Investment products sold under the Northstar-brand include Global VIP Elite, Global Advantage Plus Series, Global Index Product, Global Advantage Select, and Global Interest Accumulator (the Northstar Products). Brokerage firms involved in the marketing and sale of the Northstar Products include, but are not limited to, Bankhoh Investment Services, Inc. (Bankhoh), Ocean Financial Services, LLC (Ocean Financial), and SunTrust Investment Services, now Truist Investment Services, Inc. (SunTrust or Truist).

Pursuant to FINRA Rule 2111 (Suitability), broker-dealers and their associated financial advisors must ensure that a recommended investment or investment strategy is suitable for a retail customer. That standard of conduct was recently enhanced by the U.S. Securities and Exchange Commission’s Regulation Best Interest (Reg BI) rule. Essentially, Reg BI requires brokerage firms and their affiliated brokers, when recommending a securities transaction or an investment strategy to a retail customer, to act in the customer’s best interest at the time of the recommendation. Reasonable diligence, care, and skill must be exercised when making the recommendation, which requires, among other things, a reasonable basis to believe that the recommendation could be in the best interest of at least some retail customers, and a reasonable basis to believe that the recommendation is in the best interest of a particular retail customer, based on that specific customer’s investment profile.

Whether applying a suitability or a best interest standard, a financial advisor’s recommendation and sale of speculative, risky, and illiquid investment products may well give rise to FINRA arbitration claims for impacted Northstar investors.

Furthermore, under FINRA Rule 3110 (Supervision), brokerage firms such as Bankhoh, Ocean Financial, and SunTrust must ensure that their associated persons are adequately supervised. Brokerage firms must take reasonable steps to ensure that their brokers follow applicable securities laws and regulations and adhere to their firm’s internal policies. In those instances where a brokerage firm fails to adequately supervise its associated persons, the firm may be held liable for losses suffered by investors.

The attorneys at Giarrusso Law Group LLC have extensive experience representing investors who were unsuitably steered into risky, complex, and illiquid investment products by their financial advisor. Investors may pursue a claim to recover losses through securities arbitration before FINRA, or in some instances, through litigation. Investors who wish to discuss a possible claim regarding their investment in Northstar Financial Services (Bermuda) Ltd. offerings are invited to contact us at (201) 771-1115 or info@gialawgroup.com for a free, confidential, no-obligation consultation. Please note that claims against broker-dealers or financial advisors relating to the sale of Northstar Products may be made independent of the ongoing Northstar bankruptcy and liquidation process.