Dispute Over Fraud Case Claims at Former Pacific Life Unit

A legal fight could be brewing between Newport Beach-based Pacific Life Insurance Co. and Boston-based stock brokerage company LPL Investment Holdings Inc.

A dispute could come down to which company is liable for millions of dollars in claims stemming from fraud suits against a broker who sold stakes in a hedge fund that collapsed in 2007, according to a story in trade publication Investment News.

The broker was affiliated with Associated Securities Corp., one of three stock brokerages Pacific Life sold to LPL two years ago for about $100 million.

In a recent Securities and Exchange Commission filing, LPL said it is in a dispute with an unnamed third-party indemnifier “in connection with various acquisitions,” according to Investment News.

The publication quoted a source familiar with Pacific Life that identified the life insurer as the party in dispute with LPL.

At stake is who is liable for millions in legal fees and claims against Associated Securities broker Jeffrey Forrest.

Earlier this year, Forrest lost an $8.8 million arbitration claim and was barred from acting as an investment adviser by the SEC.

In 2005 and 2006, Forrest solicited investors in the San Luis Obispo area to buy into the APEX Equity Options Fund LP run by Utah’s Thompson Consulting Inc.

Investors were told the speculative hedge fund provided safety and security, according to regulators.

What’s believed to be Pacific Life had been paying for legal costs and claims in the case, according to LPL.

LPL recently was notified that the third party “is no longer obligated to indemnify the company for certain claims,” according to the Investment News report.