Recently many customers of Newbridge Securities Corp. have filed Financial Industry Regulatory Authority (FINRA) arbitration claims for recovery of investment losses against it and named several of its financial advisors in their claims. In all, over thirty regulatory cases have been filed against the firm. The settlements, fines and arbitration awards put together have already cost Newbridge several million dollars.
The recent complaints/lawsuits against Newbridge are the result of GWG Holdings L Bonds, GPB Capital, and other non-traded investments. Customers have alleged that the true risks of the bonds were not represented and not suitable. A number of investors who bought GWG L Bonds through the brokerage Newbridge Securities are represented by Haselkorn & Thibaut.
Newbridge investors that are concerned about their investment losses can call 1-888-614-9356 for a free consultation on investment loss recovery options from one our experienced investment attorneys.
History Of GWG L Bonds
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Life insurance and alternative investments are among the services provided by GWG Holdings, a financial services company with its headquarters in Dallas. Investors are now concerned about the condition of these investments and the potential loss of principal after GWG sold L Bonds valued at billions of dollars over the course of several years.
GWG L Bonds, as a whole, are a relatively new financial instrument that claims to provide better yields than standard publicly-traded fixed-income bonds. The bonds are intended to assist in financing the purchase of the policies, but they come with a high level of risk for the investors.
The bonds were sold with varied maturity terms ranging from 2 years to 7 years, with interest rates ranging from 5.50 percent to 8.50 percent, according to a prospectus released by GWG for the issuance of $2 billion in L Bonds. These bonds differ from conventional corporate bonds and other risk-averse investments in that they carry substantial risk.
GWG Holdings, Inc. submits a bankruptcy petition
GWG Holdings, Inc. voluntarily filed for Chapter 11 bankruptcy earlier this year in the U.S. Bankruptcy Court for the Southern District of Texas. GWG listed several factors in its filing for bankruptcy protection, including liquidity problems and an SEC probe.
Owners of GWG L Bonds, an alternative investment offered to regular investors across the nation by a network of brokerage firms, will find this announcement to be painful news. Since GWG has been the subject of more and more bad news, L Bond investors have been unsure about their investments. However, the announcement of GWG’s bankruptcy shows that the principal of L Bond investors is really at risk, and GWG investors are certain to sustain significant losses.
Brief history of Newbridge Securities
Founded in 2000 and headquartered in Boca Raton, Florida, Newbridge Securities is a full-service brokerage firm. It claims that it provides services in over 80 locations countrywide. It also has the unfortunate distinction of a large number of regulatory cases filed against it. A few recent examples:
2010
FINRA fined Newbridge $600K for their failure to supervise representatives who facilitated the sale of unregistered securities. This was, allegedly, for the purpose of manipulating trading in a stock that resulted from a reverse merger. They permitted these purportedly non-compliant transactions of unregistered stocks being sold by a few individuals through their accounts.
2014
Fined $138K by FINRA. This was for their failure to buy or sell corporate bonds at a fair price.
2016
Fined $115K, and censured, by FINRA for their failure to apply sales discounts for investors of Unit Investment Trusts (UITs) who qualified for them.
2017
Censured and fined $17,500 by FINRA. Newbridge Securities is alleged to have transmitted more than a thousand incomplete or inadequately formatted or inaccurate reports. It also incorrectly reported more than 9,300 auditable events over 147 different business days.
2017
Fined $499K, this time by the Pennsylvania Department of Banking and Securities, for their failure in supervising a particular broker. The issue pertained to the sale of structured products.
2019
Supervisory failures invited a fine of $225K from FINRA. The case pertained to the sale of complex securities, involving structured notes and inverse-leveraged and leveraged exchange-traded funds (ETFs).
Financial health issues highlighted
The Form X-17A-5, better known as the Focus Report, that Newbridge submitted to the Securities and Exchange Commission (SEC) brought to light concerns regarding its financial position. Against a revenue of $33 million in 2018, the firm had been able to net a profit of only $108 million.
“Substantial doubt” and “ongoing concern” was expressed by Liggett & Webb, the firm that audited its accounts, about its ability to stay in business. The auditor noted Newbridge having made a provision of only $625 million against unresolved claims that added up to over $4.5 million at that time, leaving a huge gap in the event it was called upon to pay out the entire amount.
Newbridge Securities appears to be a haven for rogue brokers
Newbridge appears to have developed a reputation for providing shelter to rogue brokers. These are brokers who have a history of violations. They manage to continue in the industry by jumping ship from one firm to another, often leaving a trail of arbitration claims to be faced by the old firm.
These rogue brokers include:
- David Fagenson, who was hired by Newbridge after he had been fired by UBS Financial Services for violation of their trading policies, despite being under heightened supervision at the time. Fagenson is no longer employed by Newbridge. He has 19 disclosures on his BrokerCheck record and was barred by FINRA in 2019.
- Geral Cocuzzo, who pleaded guilty to his involvement in a securities fraud in 2016 around a $131 million Ponzi scheme. Cocuzzo is no longer with Newbridge.
Beginning 2017, FINRA announced the prioritization of action to keep track of recidivist/ high-risk brokers.
Taking action against your broker
The securities lawyers at Haselkorn & Thibaut have been investigating Newbridge Securities and the various allegations of unsuitable recommendations leveled against it such as for investments in GPB Capital Holdings, Hospitality Investors Trust REIT, and L Bonds of GWG Holdings, that have resulted in significant losses to investors.
If you have conducted securities transactions through Newbridge, you would be well advised to ensure that the broker has not engaged in negligence or misconduct, especially if you have incurred losses on the investment. Churning, failure to supervise, omissions, and misrepresentations can be possible grounds for filing a FINRA arbitration claim against the firm for recovery of losses.
For a free case consultation, you can call at 1-888-614-9356 contact us via our online form.
