The 8-K also stated that the company’s board of directors had authorized management to retain the services of a restructuring advisor regarding “evaluating alternatives with respect to its capital structure and liquidity.”
Investors holding GWG L Bonds already had concerns about their investments, which may be in significant financial trouble. The SEC is investigating the company, which in 2021 missed key SEC filing deadlines, causing NASDAQ to formally notify the firm that it was not in compliance with listing requirements. In April, 2021, the company paused sales of their L Bonds.
GWG’s stock has plummeted in recent days, trading as low as $4.50 as news about GWG’s issues have been disclosed.
Investor Claims Against GWG Holdings And L Bonds
GWG Holdings, which trades publicly with the symbol GWGH, is a financial services company based in Texas that offers alternative investments, life insurance, and other investments. The firm sold billions of dollars of L Bonds in recent years.
Some investors have started to pursue investor arbitration claims against their financial advisor for the unsuitable sale of GWG Bonds or alleging that the brokerage firm failed to conduct reasonable due diligence. At least one broker-dealer, Emerson Equity, works closely with GWG to help sell the bonds to the retail public.
Silver Law Group has spoken to multiple investors who claim their advisor told them that these bonds were safe and would provide a steady stream of income.
An L Bond is a bond from a life insurance company that buys back the policy from the policyholder to finance the purchase of the policy. L Bonds are supposed to offer higher yield than standard publicly-traded fixed income bonds. A prospectus from GWG claimed that investors in the bonds could earn 5.5%-8.5% APR.
Though investors often view bonds as low-risk investments that pay a steady income stream, L Bonds involve significant risk and speculation. And they are illiquid, so investors aren’t able to quickly sell them for cash if they want to. Because L Bonds aren’t publicly-traded, they don’t have the same regulatory requirements as those that are publicly-traded.
The recent 8-K states that GWG relies “to a significant extent” on sales of L Bonds to provide liquidity and that it voluntarily suspended sales of L Bonds for most of 2021 due to the late filing of its annual report with the SEC. The company resumed sales of L Bonds in November, 2021, but experienced low sales.
GWG also said that the decision of its independent public accounting firm to decline to stand for reappointment would likely cause its 10-K to be filed later than the March, 2022 due date, and would result in another suspension in the sale of L Bonds.
Contact Silver Law Group If You Have GWG Losses
If you’ve invested in GWG Holdings L Bonds, contact Silver Law Group for a no-cost, confidential consultation at (800) 975-4345 or by email at ssilver@silverlaw.com.
Silver Law Group is a nationally-recognized law firm with extensive experience representing investors in securities 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. We handle most cases on a contingency fee basis, so nothing is owed unless we recover money for you.