Silver Law Group represents GWG L Bonds investors in FINRA arbitration claims to recover their investment losses. Contact us at 800-975-4345 for a no-cost, confidential consultation.
GWG’s L-Bonds
GWG Holdings is a company based in Dallas, TX, and sold life insurance and so-called “alternative” investments, like their self-created L-Bonds.
The L-Bonds were used to buy life insurance policies from policy holders in a secondary market that were interested in liquidating their policies for cash. The investment funds from the bond holders bought the policies from the original policy holders then continued to pay premiums until their death. The company would then receive the proceeds from the policy. These bonds have higher returns than other types but also carry considerable risks.
But many broker-dealers like Portsmouth didn’t notify the investors of the risks involved. In fact, investors were told that the L-Bonds were a safe and secure income stream, but the reality was quite the opposite. L-Bonds were speculative, risky, and illiquid at the outset. There is no market where a bond holder could re-sell as there is with stocks. The only option to recover would be transferring the bond back to the company for a 6% transfer fee.
First, GWG disclosed that the company was the subject of an SEC investigation. When the company missed its reporting deadlines in 2021, it was threatened with de-listing by NASDAQ. The company’s shares went from trading at about $9 per share in early January to below $3.75 just a few months later.
Then in January, the company filed an 8-K with the SEC indicating that they would not be making any dividend payments in that month, but they had hired a restructuring advisor. On February 14, 2022, the company officially defaulted when they missed the SEC’s deadline to make millions of dollars of payments to their investors. No payments have been made since.
In April of 2022, GWG Holdings officially filed for Chapter 11 bankruptcy, leaving investors wondering if they will recover anything.
Portsmouth’s Due Diligence Failure
Like all broker-dealers, Portsmouth Financial Services is required to vet anything they offer to their investment customers. GWG Holdings was no exception. The San Francisco-based broker-dealer sold L-Bonds but didn’t mention the increased risk to many of the investors.
Brokers and broker-dealers have a requirement to research and vet all investments they recommend to their clients, known as “due diligence.” Additionally, they must make sure that anything they recommend is also comparable to the investor’s age, income, net worth, risk tolerance, financial needs, and experience with investing.
Investors themselves also have an obligation to do their own due diligence before deciding whether to invest in something their broker recommends. Many of the investors who bought these L-Bonds were retired, elderly, and inexperienced investors who trusted their brokers’ recommendations.
FINRA, the Financial Industry Regulatory Authority, offers the opportunity to investors to recover monies through their arbitration process. If a broker-dealer or broker offers investment advice that is not suitable for you and you suffer losses, or neglects to disclose risks of an investment they recommend, arbitration through FINRA can help you recover some or all of your lost investment.
Silver Law represents investors in FINRA arbitration claims against Moloney Securities and other broker-dealers alleging that they did not perform reasonable due diligence into GWG L-Bonds or that the bonds were unsuitable for their investment profile.
Silver Law Group Represents Investors On A Contingency Fee Basis
If you invested in L Bonds from GWG Holdings from Portsmouth Financial Services or other broker-dealers, contact Silver Law Group at (800) 975-4345 or by email at ssilver@silverlaw.com.
Silver Law Group is a nationally recognized law firm with experience representing investors in securities arbitration and investment fraud cases. Scott Silver, Silver Law Group’s managing partner, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice.
Our attorneys are admitted to practice in New York and Florida and represent investors nationwide. Most cases are handled on a contingency fee basis, so nothing is owed unless we recover your money for you.