Haselkorn & Thibaut, P.A. (InvestmentFraudLawyer.com) is investigating Emerson Equity regarding GWG Holdings L Bonds. We are learning that GWG had been in financial trouble long before it began defaulting on interest payments. Recently the Securities and Exchange Commission (SEC) subpoenaed GWG for documents after it failed to file its annual 10-K. GWG put an end to the sale of L Bonds after failing to file the 10-K with SEC. GWG was forced to stop sales after the company fell behind in its interest payments.
The more serious alleged problem was that the firm nor the financial advisor did not adequately disclose the risks associated with L Bonds. Specifically, they failed to inform investors that GWG Holdings’ L Bonds were not suitable for conservative investors. It is important to be careful when investing in securities such as L Bonds because they are not traditional investments and have a high risk.
Advisors should advise you of all the potential risks as this will help you to avoid losing your money. Your losses could be due to the sales practices of Emerson Equity LLC. The law requires full-service brokerage firms to supervise their brokers and the securities products that they sell. Emerson Equity LLC has been criticized by investors for not being diligent.
We have put together a “GWG Holdings L Bond Investor Guide” to help investors. Call now at 1-800-856-3352 to get your free guide or schedule a free consultation on recovering your investment losses. No recovery, no fee.
What are the advantages of pursuing FINRA arbitration versus a Class Action Lawsuit for GWG L bond investors?
There have been efforts made to file a GWG holdings class action lawsuit and have investors represented in bankruptcy court. Our experience is that most investors would be better off filing FINRA claims than traditional lawsuits. The following are among the most significant advantages:
- Financial Recovery Potential – L bonds buyers can optimize their financial recovery rate by employing their own lawyers to initiate FINRA arbitration. In FINRA arbitration, lawyers representing private investors would seek full reimbursement for their customers’ losses.
- The Possibility of a Quick Resolution — According to FINRA, Arbitration is frequently speedier than that most court matters.
- Claims Against Emerson Equity and GWG Holdings – The ability to prosecute lawsuits versus Emerson Equity and GWG Holdings since there is no class action filed against Emerson Equity. Despite this, it seems that most L bonds buyers have claims against Emerson Equity based on the data provided. L bond buyers may file a claim versus Emerson Equity through FINRA arbitration besides bringing suits versus GWG Holdings.
It is important to be aware of the risks involved in investing in Emerson Equity L Bonds. These securities can be high-risk, speculative and illiquid investments. It has been alleged that the firm failed to supervise its brokers, resulting in investors losing tens to millions of dollars via illiquid L Bonds. Investors will have to file a claim against the brokers at FINRA arbitration if this is true.
You should be aware that Emerson Equity GWG Holdings’ L bonds can pose risks to your investments. GWG defaulted on its L Bond obligations and may suspend payments or refuse to redeem redemption requests. GWG’s letter to investors states that the company can not make preferred stock dividend payments or monthly interest payments until it has completed its evaluation process. This could take up to three to four weeks.
Last week GWG Holdings, Inc. implemented a restructuring plan which has resulted in the most recent announcement about the company’s financial future. A new Board of Directors was established and the balance sheet has been restructured. The company is looking for rescue financing and exploring various restructuring options to reduce or restructure its debt. It has not yet disclosed whether it will file for Chapter 11 bankruptcy.
GWG Holdings issued L Bonds worth $1.5 billion. These bonds were issued by GWG Holdings to raise funds for its secondary market life insurance policies. The company also agreed to make interest payments to investors in return for the bonds. Investors are advised to exercise caution, even though the interest rates for these bonds range between five and eight percent. In addition, GWG may go bankrupt. Investors should avoid L Bonds in the interim.
After failing to pay principal and interest payments, the company is now preparing to file for bankruptcy. The SEC is investigating the failure of the company to adequately disclose risks to investors. GWG L bonds were sold by several brokerage firms to individuals, many of them elderly and retired. Many GWG L Bond investors lost their entire investment due to the high yields.
L Bonds Sales
The financial crisis has caused Emerson Equity GWG Holdings L Bond sales to be suspended. Already, the company has missed $13.6million in principal and interest payments. The company now faces default on L-Bonds, with only a 30-day grace period to make the payments. Many investors could lose their entire investment if this happens.
GWG Holdings stopped selling its L-Bonds in January 2022. In an environment of low-interest rates, the company’s bonds yielded 8% which made them very attractive. Although hundreds of broker-dealers had sold the securities in the past, it wasn’t enough. The company was forced to stop selling these securities after the collapse in January 2022.
L-Bonds sales for the company were lower than expected and significantly lower than the previous sales. It is difficult for the company to estimate the return on L-Bonds and its independent auditor resigned after one year. GWG also stated that it will not be able to complete its Annual Report on Form 10K in time. This means it is unlikely to have reliable information to sell the bonds.
GWG’s ongoing business crisis has led to the suspension of Emerson Equity GWG Holdings L-Bonds sales. The company relies on L-Bond sales for its obligations. However, it is unlikely that the company will resume the offering as they just filed bankruptcy. GWG has yet to complete an audit of its annual financials before the deadline set by the SEC.
Emerson Equity Complaints
The other concern in the GWG Holdings Controversy is its connection to Emerson Equity and other securities broker-dealers. Western International Securities, Inc., Centaurus Financial, Inc., Aegis Capital, LLC, and NI Advisors are just a few of the companies involved. L bondholders who have lost money may be able to file a FINRA claim against respective broker-dealers besides filing a GWG Holdings lawsuit.
Broker-dealers are required by SEC laws and FINRA guidelines to do adequate due diligence when suggesting financial products to prospective clients. This comprises both basic due research and analyzing if the investment instrument is fit for each individual client who gets a recommendation.
Emerson Equity was founded in 2003 as a securities broker and financial advising firm. Since 2004, it has been licensed with the SEC and FINRA. According to its website, Emerson Equity bills itself as a renowned boutique investment business with customers spanning from wealthy individuals and investment firms to sponsor firms that take private placement securities to market.
Emerson Equity and GWG engaged in a Soliciting Dealer Agreement (SDA) in 2020 for the selling of L bonds. As per the SDA, Emerson Equity pledged to employ its best endeavors in soliciting subscriptions with the public offering for around 2 million L Bonds units at $1,00 per unit resulting in $2 billion in total principal.
According to analysis, Emerson Equity broker-dealers received significant commissions from the sale of the L bonds, which could explain why brokers like Tony Barouti promoted them so vigorously. As a result, the company and its broker-dealers should be held accountable for investors’ losses if they were conscious of the risks linked with the bonds, as is the case. Last year the company agreed to penalties and entry to a finding that found that Emerson Equity didn’t establish and keep adequate supervision of the brokers.
As per reports, the firm and other companies were paid commissions that ranged from 0.75% to 5% for the sale of L bonds. Also, the firms allegedly received another compensation of around 8% of the total proceeds from the sales of L bonds. Going by GWG Holdings’ history, it seems the investment firms that sold the bonds to clients failed to conduct due diligence before suggesting the bonds to customers. It is vital to note that any investor that suffered losses can pursue FINRA adjudication claims against the firms in addition to or in lieu of suing GWG Holdings.
GWG FINRA Complaints
Interesting is the recent FINRA case concerning Emerson Equity, San Mateo, California’s failure to pay L Bonds. The case involves allegations that Emerson Equity stockbrokers failed to supervise their brokers properly and did not consider the risk tolerance of investors when making investment recommendations. Although the case involves investments in life insurance bonds (which many investors may not consider suitable for their financial situation), it does concern investments in such bonds.
A consumer filed a complaint alleging that Tony Barouti (a former broker at Emerson Equity) misrepresented to investors the risks associated with GWG Holdings L Bonds. Barouti is accused of selling the bonds to clients without fully understanding the risks. Barouti is still employed by the firm, and is suspected of deceiving investors.
An investigation later revealed that GWG hadn’t filed financial statements in time for the year-end 2020, and first quarter 2021. GWG claimed that it hadn’t completed the audit required by the SEC by March 31, 2022. It is not clear how long the audit will take. Investors are advised to stay away from GWG’s L Bonds while the audit is completed.
You would have access to financial information if you invested in Emerson Equity GWG Holdings Lbonds. To recover funds, however, you can file a civil lawsuit against Emerson Equity GWG Holdings L Bonds if you invested in Emerson Equity GWG Holdings L Bonds and were unable make a decision. If you feel that the brokerage company did not follow the proper procedures, contact a securities fraud attorney to help you navigate the FINRA process.
Emerson Equity’s Tony Barouti
Barouti, who is Emerson Equity’s representative, was the lead underwriter and broker-dealer of GWG Holdings L Bonds. On April 20, 2022, GWG holdings declared bankruptcy after defaulting around $13.6 million related to the L Bonds. Here is what GWG Holdings L Bond buyers should know about the accusation against Tony Barouti:
Tony Barouti: Who Is He?
Tony Barouti’s full name is Ahmad Agha Barouti. He is a securities dealer who is being investigated for suspected fraudulent activity in the issuance of GWG Holdings L securities. Barouti pitched and offered the high-risk securities to seniors and many other retail traders for whom the bonds were not viable investments. Barouti is accused of misrepresenting the dangers involved and encouraging his clientele to invest while aware that doing it could result in significant and irrecoverable losses.
What is the background of Tony Barouti?
Barouti is a stockbroker authorized to offer services in California, Arizona, Georgia, Kansas, Maryland, New Jersey, and Illinois, according to the Financial Industry Regulatory Authority (FINRA). Reports from FINRA indicate that he has worked as a broker for Emerson Equity LLC since 2017.
Also, FINRA records indicated that Barouti has worked for California companies like Newport Coast Securities Inc., LPL Financial LLC and First Heartland Capital Inc. in the last ten years. Previously he worked shortly for various securities companies in Los Angeles and San Diego, including Brookstreet Securities Corporation, Commonwealth Financial Network, Jefferson Pilot Securities Corporation, World Group Securities Inc., Linsco/Private Ledger Corp., and WMA Securities Inc. Overall, Barouti’s 22-year career has spanned nine different companies in the securities brokerage sector.
As a FINRA-licensed broker, Barouti has had two separate client complaints during his tenure, but this could change now that he has been mentioned in possible securities fraud for the sale of GWG Holdings L securities. Barouti was accused of misrepresenting investment instruments to clients in both cases, but one was closed because of inactivity and the other withdrawn.
Tony Barouti and Emerson Equity: What’s the Deal?
Tony Barouti, a securities dealer at Emerson Equity, is accused of giving investors false information about the dangers linked to GWG Holdings L securities.FINRA reports that despite the accusations against Barouti, he is still working for the firm.
Are there GWG L Bond Fraud Lawsuits vs Tony Barouti from investors?
According to this analysis, investors in GWG Holdings L bonds who bought the bonds through Tony Barouti might well have fraud claims. Most L bond purchasers, in particular, could be qualified for a case versus Barouti premised on:
- Investors in the GWG L bond risk losing their total capital for the failure of full disclosure of the GWG L bond.
- GWG L bonds were misrepresented as having “guaranteed” returns.
- Suggestions to buy the L bonds were made despite these high-risk securities being not suitable for investors’ intermediate or conservative risk levels.
As the employer of Tony Barouti, Emerson Equity could be held accountable for clients’ losses as a result of Barouti’s alleged fraud.
Life Epigenetics Merger with GWG
GWG and Life Epigenetics Inc. decided to merge in the fourth quarter of 2019. GWG has contributed Life Epigenetics to InsurTech Holdings LLC through its wholly-owned subsidiary. Life Epigenetics owns all insurtech assets. Scientific Testing Partners, LLC, is also a subsidiary. GWG Holdings has committed $17.9 Million to the new company in the next two years, as of September 30, 2018.
Emerson Equity sold L Bonds and distributed GWG L Bonds via a network of regional broker-dealers. The firm is registered with the SEC and FINRA-regulated. GWG L Bonds sold for commissions of between 0.75% to 5.00% of principal plus additional compensation. Emerson Equity LLC split commissions with over a hundred companies, including Centaurus Financial, Inc., and Aegis Capital, LLC.
GWG will also receive a significant settlement from the federal government. The company will be able to continue its operations as usual, but at lower costs. Financial advisors will be attentive to any obstacles to high-yielding investment strategies. GWG may decide to sell itself if it is unable to reach an agreement. This allows the company to make more money.
GWG L Bonds and Emerson Equity Lawsuit “FINRA” Claim
The data obtained strongly implies that GWG Holdings deceived investors in several aspects. It includes deceiving buyers about the company’s financial situation and the dangers linked with its L bonds. Most buyers pursue legal action to recoup their losses by submitting individual suits with FINRA arbitration.
Suppose you bought L Bonds via Emerson Equity LLC and incurred losses as a result of GWG Holdings L securities. In that case, you are advised to contact an investment fraud lawyer.
Request a Free Consultation to Discuss Your GWG L Bond Loss Claim with Emerson Equity. We have put together a “GWG Holdings L Bond Investor Guide” to help investors. Call now at 1-800-856-3352 to get your free guide or schedule a free consultation on recovering your investment losses. No recovery, no fee.