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.
The Precarious Premise of L-Bonds
Based in Dallas, TX, GWG Holdings is a company offering life insurance policies and multiple types of so-called “alternative investments.” They created the L-Bond in 2012 and have since sold more than $2 billion of them.
L-Bonds are based on the purchase of active life insurance policies on the secondary market. People who are interested in divesting their policies can either let them lapse and lose they money they’ve paid into them, surrender them for less than the policy is worth, or attempt to sell for cash. Many are over 65 who can no longer pay premiums, need the cash, or just don’t want them anymore. GWG purchased these policies for more than the surrender value but less than the policy’s actual value.
Once purchased, the company then continues to make payments until the original policyholder dies. Then the company collects the proceeds and continues to purchase more policies from sellers.
This makes the L-Bonds speculative and high-risk investments, even with the promise of higher returns than other bond investments.
But Moloney Securities never told these investors were never told of the higher risk of these bonds. In fact, Moloney and other broker-dealers continued to sell the bonds until the company’s operations were halted.
Due Diligence: Did Moloney Securities Do Any?
After months of uncertainty, GWG filed bankruptcy in April of 2022. This was after defaulting on payments to bond holders in January, and the news of an SEC investigation in 2020. So why did brokers continue to sell L-Bonds to investors? And did they even look at what was happening with this company?
Brokers and broker-dealers are required to perform due diligence on any and all recommendations for investments that they make to their clients. This includes reviews, research, analysis, and/or audits to confirm that the company they recommend is legitimate. They should include advice about any risks involved in the purchase and holding of that investment. A broker and broker-dealer must also ensure that any investment they recommend is also suitable for an investor with respect to their age, financial needs, risk tolerance, investment experience and net worth.
By the same token, an investor can (and should) also conduct their own due diligence any time they’re considering investing in something new. In the case of the L-Bonds, many of the bond buyers were retired, elderly, and were not sophisticated investors.
If a broker or broker-dealer makes unsuitable investment advice that leads to financial losses, or fails to disclose risks of a particular investment, you may be able to recover monies through FINRA arbitration. 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 Moloney Securities, 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 both 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.