An investor from Salt Lakes, Arizona, has filed a securities claim under the arbitration process made available by the Financial Industry Regulatory Authority (FINRA) for such disputes. The claim against Centaurus Financial is for losses incurred in investments in GWG L Bonds. The claimant seeks close to $500K in damages.
Otto Ramon Bohon, earlier a broker with Centaurus, has been named in the offering documents. Bohon has, of late, been associated as a registered representative with Catalina Investments, now known as Modern Wealth management.
The investor and his spouse were introduced to the junk bonds at a retirement planning seminar that was hosted by Bruce Moore, then the Senior VP of Catalina investments. It seems that Moore persuaded the couple to invest their retirement funds in these risky bonds.
Haselkorn & Thibaut is trying to contact investors who lost money by buying GWG L Bonds in light of GWG Holding’s bankruptcy. We are now defending GWG investors in lawsuits brought against brokers and financial advisors. Investors of GWG L Bonds and GWG Preferred Stock are urged to call our experienced investment fraud attorneys at 1-800-856-3352 for a free consultation.
About GWG Holdings
The financial woes of GWG have been in evidence for some time. At the end of 2020, their liabilities included more than $1.6B outstanding towards l Bonds and other debt and over $200M outstanding in senior debt. The company had also been subpoenaed by the Securities and Exchange Commission (SEC), earlier that year on account of several issues such as concern over their accounting practices. GWG, however, continued to sell L Bonds to investors even after these proceedings had been set in motion.
GWG has, since, also defaulted on interest payments amounting to $13,6M to bond owners. It filed for Chapter 11 bankruptcy in April 2022.
GWG L Bonds
GWG L Bonds pooled money from bond investors to purchase life insurance policies. After the insured individual died, the L Bond paid out the death benefit to investors. The company’s business model changed in 2018 and it began investing its capital in riskier assets. Many investors were unaware of the material reorientation, which made GWG a much higher credit risk.
GWG Holdings also received compensation from the company for selling the bonds. These fees included dealer manager fees, wholesaling fees, and expense allowances. As a result, the company had an incentive to sell the GWG L Bond and failed to disclose this conflict of interest to investors. In addition, many investors are claiming they were also unaware of the risks.
Before GWG defaulted on its interest payments on the L Bonds, the company faced financial difficulties. In October 2020, the Securities and Exchange Division of Enforcement sent a subpoena to the company, which delayed its filing of its 10-K with the SEC. Further, GWG delayed filing a form 10-K with the SEC because it had financial reporting issues. It eventually admitted to unreliable financial reports to the SEC, which forced the company to halt the sales of the L Bonds.
GWG L Bond investors may be able to recover losses. As the Securities and Exchange Commission (SEC) requires, broker customer agreements require that investor disputes be settled by arbitration. This means that thousands of GWG L bondholders must file individual arbitration claims against financial advisors in order to recover losses. The good news is that this process is usually faster than going to court.
Involvement of Brokers and Firms
Emerson Equity, who was appointed as the managing broker-dealer for the security, forged partnerships with over 140 broker-dealers to sell the L Bonds to investors.
The deal between Centaurus and Emerson, similar to many others, involved the sharing of the 8% commission for the sale. Moreover, the commission was based on a maturity sliding scale; in other words, the longer the maturity sold, the greater the share for Centaurus, apparently fueling the push for sales at any cost.
GWG Investors Represented by Haselkorn & Thibaut (InvestmentFraudLawyers.com)
The GWG L Bond lawyers at Haselkorn & Thibaut, P.A. (InvestmentFraudLawyers.com) are representing multiple investors and helping them recover losses against broker-dealers. Negligence, omissions, supervisory failures, misrepresentations, and grossly negligent behavior are some of the allegations made by the investors. Many investors further contended that the GWG Holdings investment was presented to them not merely as a low-risk investment but also as an investment that was termed as ‘foundational’ with its ability to reduce the exposure to market volatility as well as the risk level of their portfolio.
InvestmentFraudLawyers.com is pursuing multiple cases for losses in L Bond investments against Centaurus on behalf of several investors. FINRA arbitration cases are also being pursued by their L Bond attorneys against other firms like NI Advisors, Center Street Securities, and other brokerage firms.
If you wish to pursue a claim, you will need to file your own case against the firm, and financial advisor, who sold you the security, most likely someone associated with a local form like Modern Wealth management in Tucson. A securities claim of this nature is best pursued with the support of an experienced investment attorney.
If you have had dealings with broker Otto Ramon Bohon of Modern Wealth management, or have suffered losses in your GWG L Bond investment, we invite you to speak to one of the skilled attorneys to evaluate your case and explore your legal options. You can reach us at 1-800-856-3352 for a free consultation.