The Ontario Securities Commission has ordered an Ontario company to stop dealing in viatical settlements until it receives proper securities registration. The decision follows a hearing that began in June 2006, on a case that dates back more than five years.

Waterloo, Ont.-based Universal Settlements International Inc. deals in life insurance policies purchased from terminally ill patients.

The commission found that “the interests in death benefits of life insurance policies from insured persons offered by Universal Settlements International Inc. are securities under subsection 1(1) of the Securities Act. Further, the commission found that USI has not complied with Ontario securities law and has not acted in the public interest.”

The commission ordered USI to permanently cease trading unless it fulfills the registration requirements in Ontario securities law, or receives an exemption under securities law.

For several years the OSC and the Financial Services Commission of Ontario have struggled to impose regulatory powers on viatical companies.

In February 2006, the OSC announced that it would proceed on its attempt to establish that engaging in a secondary market for insurance policies is illegal.

In 2001 FSCO ordered USI to cease and desist from dealing in viatical settlements in Ontario.

Viatical settlements allow a life insurance policy owner to sell the policy to a third party at a discount from the face value of the policy.