Many GWG L Bondholders have filed FINRA investment fraud cases to recover their losses against their financial advisors at broker-dealers such as Emerson Equity and Western International who sold them the bonds.
A syndicate of broker-dealers sold $ 1.3 billion of GWG L Bonds to thousands of retail investors. The bonds are now in default and GWG has filed for bankruptcy. The investors are now stuck holding the bag.
A recent Wall Street Journal article exposes evidence which should bolster investor cases against their financial advisors. The advisors had an obligation to conduct due diligence about the products they sell. Had the financial advisors done proper due diligence on GWG’s finances, they likely would not have recommended the bonds to their customers.
In 2021, GWG’s accounting was found by the Securities Exchange Commission ( SEC ) to be improper. The accounting irregularities go back to 2017 when GWG merged with a company called Beneficient.
Prior to the merger, GWG sold L bonds which pooled money from bondholders to purchase life insurance policies. After the merger, a significant portion of bondholders’ money would instead go toward growing exposure to “alternative assets” by making investments in Beneficient along with repaying some L bond investors.
The SEC determined that Beneficient’s accounting was improper and required the company to restate its financial showing massive losses and that its equity valuation had been vastly overstated.
After the SEC’s findings were made, the SEC informed the broker-dealers that they would be investigated if they sold any more L bonds.
There were numerous “red flags” about GWG which the financial advisors should have heeded. Had they done so, much of investors’ losses could have been avoided.
The following is a list of the firms selling GWG L bonds. Our firm is investigating these firms for possible investment fraud cases.
Centaurus Financial, Inc.
Great Point Capital LLC.
National Securities Corporation.
Western International Securities, Inc.
Aegis Capital, LLC.
Newbridge Securities Corporation.
Dempsey Lord Smith, LLC.
Coastal Equities, Inc.
International Assets Advisory, LLC.
Arete Wealth Management, LLC.
Capital Investment Group, Inc.
Lifemark Securities, Corp.
Westpark Capital, Inc.
Ausdal Financial Partners, Inc.
IFP Securities, LLC.
Center Street Securities.
Cabot Lodge Securities LLC.
Kingswood Capital Partners, LLC.
American Trust Investment Services, Inc.
Ages Financial Services, LTD.
Landolt Securities, Inc.
Intervest International Equities Corporation.
JRL Capital Corporation.
The FIG Group, LLC.
M Stevens Securities, LLC.
Brokerage firms are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.