An approximately $10 million life insurance policy taken out by former Convergent chief executive David Zier, who committed suicide last October, has added a new twist to the mystery surrounding his death and what happened to the millions he was managing in a privately held fund.
In 2012 as his fund, Zier Asset Management, suffered substantial losses, Mr. Zier took out a key man-type life insurance policy that would pay out death benefits of about $10 million, or the approximate value of the assets in the fund, to its investors, who were a handful of close friends and family, according to sources close to the matter.
The policy has since paid out, which has compensated the investors for their investments in ZAM, sources said, declining to speak on the record given pending regulatory investigations.
TIMING RAISES QUESTIONS
The timing, however, raises questions because the policy included an exemption for suicide that lasted two years. Mr. Zier, 44, took his own life in the weeks following the two-year anniversary, sources said.
A source close to Mr. Zier described him as “very pragmatic,” and said that by committing suicide, Mr. Zier may have made the “ultimate sacrifice” in trying to ensure that his friends and family were made whole on their investments. He may also have been avoiding potential regulatory liabilities for falsely reporting assets, the source said.
The fund is estimated to have held around $10 million at one point, although the exact value has not yet been determined because most of the assets that Mr. Zier had reported to the investors were not accurate and the fund had lost most of its value. Exactly what happened to the funds is not clear, and regulators are still investigating.
One source with direct knowledge of the matter said that it is now clear that losses in ZAM began well before 2012 and may have resulted from a risky trade that went awry. Mr. Zier had been attempting to recover or hide losses by bringing in more money, but was ultimately unable to do so. The life insurance could have been a “Plan B,” they said.
Doug Wolford, who took over as the chief executive of Convergent, said he had heard that investors were made whole — or “more than whole”— through a life insurance policy, but that he personally did not have direct knowledge of the matter because it occurred outside the realm of Convergent. The assets were held in a private account and ZAM cleared through a third-party broker-dealer unrelated to Convergent, he said.
It would not be unusual for someone who was successful to have taken out a life insurance policy, Mr. Wolford said, and Mr. Zier did not show signs of trouble.
“He was a cheerful and positive guy and remained a cheerful and positive guy shortly before his passing,” Mr. Wolford said. “We just don't know why Dave took his own life.”
Mr. Wolford said in December that shortly before Mr. Zier committed suicide, compliance officials at Convergent, which had around $8.4 billion in assets as of its most recent Securities and Exchange Commission filing from September, had begun to question Mr. Zier about trades in ZAM that appeared to violate the firm's policy against trading in certain restricted stock. Those concerns were reported to regulators, and the speculation at the time was that Mr. Zier was seeking to avoid the potential fallout.
The Financial Industry Regulatory Authority Inc. and the SEC are investigating Mr. Zier's “outside personal account activity,” according to his
BrokerCheck report.
