Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, is reporting on the latest FINRA enforcement action against WestPark Capital, Inc. over GWG L bond sales and private placement due diligence failures. The Financial Industry Regulatory Authority (FINRA) censured the Los Angeles broker-dealer and imposed a $175,000 fine alongside $345,073 in restitution to affected investors. This marks the second time in five years that FINRA has sanctioned WestPark for supervisory breakdowns involving private placements.
FINRA enforcement action summary
Table of Contents
On June 1, 2026, WestPark Capital signed a Letter of Acceptance, Waiver, and Consent (AWC) with FINRA. The firm neither admitted nor denied the findings. The AWC documented two primary violations. First, WestPark failed to reasonably supervise its registered representatives who recommended GWG L bonds to retail customers between March 2019 and February 2021. Second, the firm failed to establish and maintain an adequate supervisory system for conducting due diligence on private placement offerings dating back to at least December 2018.
The restitution order covers four customers who did not resolve their claims through separate arbitration proceedings. Six of the ten affected GWG L bond customers had already settled their arbitration claims with WestPark. The AWC also requires a senior management registered principal to certify within 90 days that the firm has remediated its supervisory deficiencies and implemented a compliant written supervisory procedures program.
GWG L bond recommendations and supervisory failures
Between March 2019 and February 2021, five WestPark registered representatives recommended GWG L bonds to ten retail customers. Every one of those customers had a moderate risk tolerance. Their investment objectives did not include speculation. Four of the ten were senior investors. Despite these profiles, the representatives concentrated between 11 percent and 75 percent of each customer’s liquid net worth in alternative investments, including GWG L bonds.
WestPark’s written supervisory procedures recited the requirements of Regulation Best Interest (Reg BI) and FINRA Rule 2111 but lacked any practical procedures for conducting compliance reviews. The procedures also failed to address how supervisors should escalate concerns about individual recommendations or patterns of unsuitable recommendations. This gap left representatives free to recommend high-risk, illiquid products to customers who should never have been exposed to them.
| Customer factor | Details |
|---|---|
| Number of affected customers | 10 retail investors |
| Senior investors among them | 4 |
| Risk tolerance of all 10 | Moderate |
| Investment objectives | Did not include speculation |
| Concentration in alternatives | 11%–75% of liquid net worth |
| Customers who settled arbitration | 6 |
| Customers receiving AWC restitution | 4 |
Private placement due diligence failures
The AWC found that WestPark failed to conduct adequate due diligence across four private placement offerings involving two separate issuers. These offerings spanned from December 2018 through December 2023.
Issuer 1 was a development-stage cannabis company formed in October 2018. It had no revenue, no operating history, and was not licensed to operate in any jurisdiction. WestPark’s first offering for this issuer ran from December 2018 through January 2020, raising approximately $3.1 million from 72 WestPark customers. The firm did not investigate the feasibility of the company’s license applications or its revenue plan. A second offering in July and August 2020 raised approximately $365,000 from eight customers, seven of whom already held positions. WestPark ignored obvious red flags, including the issuer’s default on monthly distributions and a landlord legal proceeding over unpaid rent.
Issuer 2 was a rent-to-own retailer. WestPark’s first offering ran from September 2019 through January 2020, raising approximately $3.9 million from 90 customers. A second offering ran from May 2022 through December 2023, raising approximately $2.7 million from 44 customers. In both cases, WestPark relied solely on third-party due diligence reports commissioned by the issuer itself. The firm performed no independent due diligence. WestPark also ignored red flags including a high debt-to-equity ratio and the issuer’s inability to redeem approximately $30 million in outstanding prior notes at maturity.
| Offering | Issuer type | Period | Amount raised | Customers | Key red flag ignored |
|---|---|---|---|---|---|
| Issuer 1, Offering 1 | Development-stage cannabis | Dec 2018–Jan 2020 | ~$3.1 million | 72 | No license, no revenue |
| Issuer 1, Offering 2 | Development-stage cannabis | Jul–Aug 2020 | ~$365,000 | 8 | Default on distributions, unpaid rent |
| Issuer 2, Offering 1 | Rent-to-own retailer | Sep 2019–Jan 2020 | ~$3.9 million | 90 | High debt-to-equity ratio |
| Issuer 2, Offering 2 | Rent-to-own retailer | May 2022–Dec 2023 | ~$2.7 million | 44 | $30M in unredeemed prior notes |
Prior FINRA enforcement against WestPark Capital
This is not WestPark’s first regulatory action involving private placements. In 2021, FINRA found that WestPark made negligent misrepresentations and omissions in connection with private placement offerings and failed to supervise. That earlier AWC involved 33 promissory notes totaling approximately $3.9 million issued by WestPark’s parent company, WPCFS, to 21 customers between January 2012 and January 2018. The notes carried 3- and 5-year maturities with 5 percent interest plus equity and profit participation features.
WestPark had falsely claimed that WPCFS held a $1 million bank line of credit that was not in default. In reality, the line of credit had defaulted. The firm also failed to disclose net operating losses in every year from 2012 through 2016. The 2021 sanctions included a censure, a $250,000 fine, and rescission offers to holders of 19 promissory notes. WestPark’s CEO, Richard Rappaport, was separately fined $30,000 and suspended.
| Enforcement action | Year | Violation type | Fine | Restitution or remediation |
|---|---|---|---|---|
| First AWC | 2021 | Negligent misrepresentations and failure to supervise private placements | $250,000 | Rescission offers to 19 note holders |
| Second AWC | 2026 | Failure to supervise GWG L bond recommendations and private placement due diligence | $175,000 | $345,073 restitution to 4 customers |
FINRA’s finding of a willful violation in the 2026 AWC means that WestPark Capital is now subject to statutory disqualification under FINRA bylaws Article III, Section 4. This is a significant regulatory consequence that can affect a firm’s ability to continue operating in the securities industry.
GWG L bond bankruptcy and investor recovery
GWG Holdings, Inc. defaulted on its L bonds around January and February 2022 after missing approximately $13.6 million in interest and principal payments. The company filed for Chapter 11 bankruptcy in April 2022. A reorganization plan was confirmed in June 2023. Approximately $1.6 billion in GWG L bonds were sold through roughly 40 broker-dealers. Investors face projected recovery of only about 2.7 to 3.4 cents on the dollar, according to the Wind Down Trust.
In May 2026, a Manhattan federal jury convicted Bradley Heppner, the former chairman of GWG Holdings and Beneficient, on all counts. The charges included securities fraud, wire fraud, conspiracy, false statements to auditors, and falsifying records. The indictment alleged that Heppner misappropriated more than $150 million from GWG through a shell entity called Highland Consolidated LP. Sentencing has not yet been reported.
Other broker-dealers have also faced enforcement over GWG L bond sales. FINRA previously censured Cape Securities and ordered $145,072.62 in restitution over GWG L bond recommendations to six retail customers, five of whom were seniors. Cape Securities filed to terminate its FINRA registration in March 2026.
Recovery options for investors with GWG L bond losses
Investors who suffered GWG L bond losses through WestPark Capital or any other broker-dealer may still have recovery options. FINRA arbitration allows investors to pursue claims against firms that recommended unsuitable investments or failed to supervise their representatives. Our firm handles these matters and can evaluate whether a claim may be viable.
The fact that WestPark has already been sanctioned by FINRA for supervisory failures does not prevent individual investors from filing their own arbitration claims. Each investor’s circumstances differ, and the amount recoverable depends on the specific facts. Investors who purchased GWG L bonds at firms other than WestPark may also have claims, particularly where concentration and suitability were concerns.
We encourage anyone who lost money in GWG L bonds or other private placements recommended by WestPark Capital to contact us for a free consultation at 1-888-885-7162 or through investmentfraudlawyers.com. Time limits apply to filing arbitration claims, so prompt action is important.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes. Each case depends on its own facts and circumstances. Investors should consult with a qualified attorney to evaluate their specific situation. No attorney-client relationship is formed by reading this article.
For a complete overview of the case, see our GWG Holdings lawsuit and L Bond recovery guide.
