Broker Joseph Beam Subject Of Six Customer Disputes Over GWG L-Bonds

Joseph Beam (Joseph Farrell Beam CRD# 5407778) is a former registered broker and investment advisor last employed with Capital Investment Group, Inc. (CRD# 14752) of Flat Rock, NC. His previous employment was with Suntrust Investment Services, Inc. (CRD# 17499) of Hendersonville, NC.  No additional employment information is available. He began in the industry in 2007.

Beam is the subject of six customer disputes filed from 7/19/2022 through 4/18/2024. Of the six, four are “pending” and two have been settled. All six include descriptions of unsuitable recommendations, breach of contract, failing to conduct due diligence, and breach of fiduciary duty, and other allegations. Each disclosure described recommendations for and purchases of GWG Holdings’ L-Bond products that ultimately led to losses.

The two settled claims are:

• Filed on 7/19/2022, with allegations of “unsuitability.” Although Beam was not named as a respondent in the filing, his name did appear in the Statement of claim. The customer requested damages of $80,000, and the claim settled for $32,500. There is a second identical claim listed as “pending,” but it’s unclear whether this is the same customer.
• Filed on 11/29/2022, this claim’s allegations were simply, “Misrepresentation and unsuitability of an investment in GWG Holdings, Inc.” The customer requested damages of $160,000, and the claim settled for $60,000.

The four remaining pending claims have a combined total $705,000.

GWG Holdings’ L-Bonds

GWG L bonds were bonds that purchased life insurance policies from policyholders who no longer wanted to continue paying premiums. Policyholders could sell their policies for more than they would get otherwise. The policies were then financed by the bond investors money, and they would become the policy’s beneficiary when the original policy holder passed away.

L-Bonds offered the potential for a higher return than other bonds for investment. But along with that higher return came higher risk. Bond holders had no secondary market to sell them. If they no longer wanted them, they would have to surrender the bonds to GWG for a 6% surrender charge.

Investors needed to have the patience to wait until the original policyholder died. That could be months, years, or even decades, depending on the individual policyholder.

Retail customers who bought these bonds were not told about the increased risks and non-liquid nature of the bonds. Many customers were older and retired investors who were seeking another form of investment income for retirement.

The L-Bonds were speculative, unrated, and illiquid. They were not intended for retail investors but were sold to them anyway by brokers and broker-dealers throughout the US. Most brokers failed to do due diligence, instead relying on company sales teams for their information. They told their customers that the L-Bonds were “safe and secure” investments. GWG Holdings declared bankruptcy on April 20, 2022.

Did You Invest With Joseph Beam?  

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