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GWG Holdings Inc. Receives Notification of Non-Compliance from Nasdaq Amidst Ongoing L Bond Fraud Saga

April 29, 2022 Blog

According to an April 6, 2022 press release published by the U.S. Securities and Exchange Commission (SEC), GWG Holdings Inc. has received a notification of non-compliance from Nasdaq. As stated in the SEC’s press release, the notification is based on the fact that GWG “was not in compliance with requirements of Nasdaq Listing Rule 5250(c)(1) as a result of not having timely filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2021.”

This is not the first time GWG Holdings has fallen behind on its reporting requirements under federal securities laws. It also is not the first time the firm has received a notification of non-compliance from Nasdaq. But, as the firm continues to stumble forward, it is unclear whether it will be able to submit a Form 10-K Annual Report for 2021 by Nasdaq’s 60-calendar-day deadline this time around.

Despite GWG’s growing list of problems, the press release continues to tout the firm’s “innovative” approach and its “diverse portfolio of life insurance policies that, as of September 30, 2021, included $1.8 billion in face value of life insurance policy benefits.” Of course, what the press release fails to note is that the firm stopped selling L bonds based on this “diverse portfolio” and that the firm is facing numerous allegations of investor fraud related to its promotion and sale of these illiquid and high-risk investments. It also omits any mention of the fact that the firm has not only stopped making interest and maturity payments to L bond investors but also that it has stated that it doesn’t know when or if it will start making these payments in the future.

GWG Holdings Has Yet to File Its Form 10-K Annual Report for 2021

At the time of writing, GWG Holdings has yet to file its Form 10-K Annual Report for 2021. This means that the firm remains in non-compliance with Nasdaq Listing Rule 5250(c)(1).

According to the SEC’s EDGAR database, GWG’s last filing was a Form 8-K Current Report filed on April 20, 2022. This report had nothing to do with the notification of non-compliance the firm received from Nasdaq. Instead, the firm used its April 20 Form 8-K filing to disclose that it had filed for Chapter 11 bankruptcy in Texas.

GWG Holdings Isn’t Going in the Right Direction

While GWG Holdings is asking its L bond investors to be patient, it is fairly apparent that the company is not going in the right direction. The firm’s Chapter 11 bankruptcy filing is a significant development, particularly in light of the fact that the firm ceased L bond sales earlier this year. This is because the firm has previously stated that it relies, “to a significant extent,” on L Bond sales to meet its ongoing financial obligations. If GWG Holdings cannot afford to pay its L bond investors currently and is not generating the revenue it will need to pay these investors in the future, it is difficult to see any light at the end of the tunnel.

In a press release announcing its Chapter 11 bankruptcy filing, GWG states that it has obtained a $65 million credit facility to use for “general corporate purposes.” Notably, however, the press release makes no mention of the firm’s outstanding debt—or any intention to repay its debt—to its L bond investors. The firm appears to be intentionally keeping investors in the dark while doing everything it can to protect its own financial interests—perhaps because it is doing so at investors’ expense.

GWG L Bond Investors Are Eligible to File Claims in FINRA Arbitration

Given GWG’s current state of affairs, many L bond investors are choosing to exercise their rights in FINRA arbitration. Our firm’s investigations have uncovered evidence that GWG Holdings misled retail investors into unsuitable L bond investments. We have also uncovered evidence that GWG’s L bond brokers, Emerson Equity LLC and Tony Barouti, misled investors, and we are handling FINRA arbitration claims against Emerson Equity and Barouti on behalf of aggrieved L bond investors as well.

Schedule a Free and Confidential Consultation about Your GWG L Bond Loss Claim

If you need to know more about the options that are available to investors who have suffered losses with GWG L bonds, we encourage you to contact us for a free, no-obligation consultation. Please call 212-742-1414 or inquire online to schedule a confidential appointment today.

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