According to the complaint, HSBC had been a custodian of life insurance policies used as collateral for bonds that SLS sold to investors, and which were falsely marketed as safe.
Companies in the so-called life settlement business buy life insurance policies on older individuals, and can collect death benefits when the insureds die. Securities backed by such policies are sometimes known as 'death bonds.'
One prominent seller of these bonds was Keydata Investment Services, which had business dealings with SLS, and whose sale of the bonds caused big losses for thousands of UK pensioners.
Keydata also failed in 2009. Britain's Serious Fraud Office dropped a probe into that company in May 2011, saying it lacked enough evidence to prosecute.
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