Investors have lost millions of dollars in GWG Holdings bags — aka “L Bonds,” an alternative investment that is backed by life insurance policies. Investing in these bonds is considered high risk and illiquid. Brokers have a responsibility to perform due diligence on these investments and adequately disclose the risks to their customers. If a broker fails to do so and a customer loses money on an L Bond, the victim can file a FINRA complaint against the brokerage firm.
The GWG L Bonds were a type of alternative and high-risk junk bond that was sold by many brokers. The bonds were backed by the proceeds of the sale of life insurance policies from which GWG Holdings would collect premium payments. These premium payments, and the proceeds of the sale of the policy when it was eventually terminated, were to be used to pay interest and principal to bond holders. The bonds were priced in the secondary market at pennies on the dollar.
Despite these risky attributes, the GWG learn more Bonds were sold by a number of brokers to unsophisticated investors. Often, these securities were offered to retired individuals who were unable to evaluate the level of risk involved independently. Brokers were either unaware of the problems at GWG or failed to conduct sufficient due diligence on the company.
In April 2022, GWG Holdings filed for bankruptcy protection, leaving investors holding the bag. GWG is currently unable to make interest or redemption payments on the bonds, and it is unclear what the value of the bonds will be once the company emerges from bankruptcy.
A FINRA investigation revealed that GWG had been hiding significant financial issues from its investors. In fact, the company owed more than $1 million in unreported debt. In addition, the company failed to file an annual report within the required time period.
GWG’s bankruptcy filing was a result of its inability to obtain financing that would enable it to restructure the debt on its balance sheet. Moreover, the company has been delisted from NASDAQ. Individuals who invested in the GWG Holdings L Bond series may be able to recover their losses by filing a FINRA arbitration against the brokerage firm that sold them. These cases are typically resolved much more quickly than a class action lawsuit. Contact Rose Law to learn more about your options. We will work with you to determine if you are eligible for recovery from your broker. Our attorneys focus on investment fraud and will help you get the compensation that you deserve. Call us today. 2019 Rose Law Firm, PC All Rights Reserved.