Up to a million dollars have been sought by a group of investors in Arizona and Utah as compensation for losses incurred in investments in L Bonds of GWG Holdings. The investors have filed an arbitration claim through the Financial Industry Regulatory Authority (FINRA) process for such claims, seeking compensation from Benchmark Investments, Centaurus Financial, and Gregory Richards, a financial advisor.
In April 2022, GWG Holdings, Inc. filed for bankruptcy protection under Chapter 11. GWG L Bonds offered lucrative sales commissions with over 140 brokers and their representatives are understood to have benefited from high commission earnings for selling these securities.
Haselkorn & Thibaut is looking to speak to investors that lost funds due to GWG L Bonds and are worried following GWG Holding’s insolvency. Our national law firm currently represents investors who have filed claims against brokerages. GWG L Bond and GWG preferred stock investors are encouraged to contact our experienced investment fraud attorneys for a confidential and free consultation at 1-888-614-9356.
A retired widow is part of the group of investors who have filed this claim and was recommended this investment by Richards. Other investors impacted by the unsuitable recommendations made by Richards for investing in these high-risk, speculative, illiquid junk bonds include two children and even a friend. Though all of them had different investment goals and were in different phases of their life requiring different investment choices, what binds them together is the unsuitable investment sold to them by Richards, which led to losses.
One investor claims to have put his entire savings into these bonds. Others contend that the concentration of their investments in these bonds was recommended. Almost all of them say that the investment was presented to them as safe and delivering a high yield, with the issuer GWG Holdings being a financially sound company.
Investing in GWG L Bond
In recent months, GWG L Bonds have experienced an extraordinary decrease in value. These bonds were issued by GWG Holdings and purportedly purchased life insurance policies on the secondary market. Investors were promised interest in their investments, not only has GWG defaulted, but many of the bonds were sold for pennies on the dollar. Currently, the Securities and Exchange Commission (SEC) is investigating brokerage firms that sold the bonds. For these reasons, investors should exercise caution before investing in GWG L Bonds.
First, investors should consider whether GWG L Bonds is suitable for them. The GWG may have misled investors by failing to disclose the financial risks associated with these bonds. In addition, these bonds were recommended by Emerson Equity to conservative investors. The overall risk associated with GWG L bonds is too high for most regular investors.
In addition to the risk of default, investors should understand that GWG owes multiple lenders and may not be able to pay back their investments in full. L Bonds are structurally junior to GWG’s debt, which means that if the company filed for bankruptcy, the investors may receive no money.
The GWG Holdings LP has faced a lot of criticism over its failure to properly disclose the risks associated with its L Bonds. Most of the complaints have been filed against Emerson Equity LLC, which is the entity that owns GWG Holdings. While individual investors can file a case against GWG Holdings through FINRA arbitration because it is also the responsibility of the brokerage firm and financial advisor to conduct appropriate due diligence. As a result, most of the people who purchased GWG L bonds didn’t realize the risk involved in buying alternative assets.
Haselkorn & Thibaut contend that the brokerages recommended L Bonds without disclosing their high-risk status, which harmed many investors who were elderly and retired.
A speculative asset such as life insurance is highly risky and illiquid, making it difficult for investors to sell them. GWG Holdings suspended the sale of its L Bonds in April 2021. The company’s financial condition worsened and the illiquidity of its investment was a major concern.
FINRA arbitration claims
FINRA arbitration claims against GWG L Bonds have been on the rise since Titan Securities unsuitably recommended these investments. GWG L Bonds were not liquid and not registered which made them unsuitable for many investors.
Unlike court litigation, FINRA arbitration involves a private, confidential setting. Unlike a court trial, which can involve many witnesses and all documents filed in the case, FINRA arbitration is private. Typically, it takes three arbitrators to decide on a case. When the award exceeds $100,000, the arbitration panel will be comprised of three arbitrators.
The failure to follow FINRA regulations can expose the firm to recovery claims through arbitration. Lastly, the arbitration process is generally faster and less expensive than a traditional lawsuit, so investors may want to pursue the claims against GWG Holdings through FINRA.
The recommendations seem to be in violation of the requirement of the financial advisor needing to ascertain that it would contribute to the investment goals of the client and is in line with his investment profile indicators, such as the risk tolerance level. Not having done so can expose the broker and broker-dealer to customer claims in case of losses.
The sales process in many cases, it seems, suffered from a lack of supervision. Richards, it seems, was a self-supervised operator with no evidence of onsite compliance. It is unlikely that these sales would have passed through a vigilant supervisor without being questioned.
Benchmark Investments, Centaurus, and Richards of Liberty Wealth Management have been accused of negligence in the filed FINRA arbitration claim.
CRD of Gregory John Richard
Richards is a broker registered with Benchmark Investments. He also operates Liberty Wealth Management in Scottsdale, AZ. From May 2011 through February 2020, he was a registered representative of Centaurus.
Prior to Benchmark, Richards was a registered representative of First American National Securities, USAllianz Securities, and Questar Capital. He has been in the industry for over 21 years.
He has two earlier customer disputes on his profile, both relating to 2008:
- The customer claimed unsuitability. The claim was settled for $23K.
- Possible memory issues could have impacted the customer’s recollection of the permissions granted by her. With the help of expert investment attorneys, the case was settled for $11K.
Are you an impacted investor?
If you have suffered losses and you believe the security sold to you could be classified as unsuitable, you should seek expert guidance for the best results. You need someone like Haselkorn & Thibaut (InvestmentFraudLawyers.com) which has represented investors against brokerage firms and successfully recovered millions of dollars on their behalf, on your side.
The L Bond Investment attorneys of Haselkorn & Thibaut have represented investors in FINRA arbitration claims of concentration, misrepresentation, and unsuitability against Centaurus Financial, Benchmark Investments, other broker-dealers, and local affiliates such as Liberty Wealth Management.
Explore your legal options by scheduling a no-obligation, free consultation with InvestmentFraudLawyers.com. We have a 95% win rate and over 50 years of experience. You can reach us at 1-888-614-9356.