It’s natural to be perplexed if you are one of the 17,000-plus investors who invested in GWG L bonds. You may be curious about this for various reasons, including the frequency with which the SEC has taken enforcement action, the SEC’s ability to take action against the firm, and the company’s ability to make up any missed payments.
Investment firm GWG Holdings, Inc focuses on purchasing and retaining life insurance contracts. Bonds issued by the company may provide investors with a means of earning interest income; however, it is important to note that the value of bonds, like the value of any other financial investment, can be affected by several factors, including changes in the interest rate, the bond’s credit rating, and the general state of the market.
Before making any investment decisions with GWG Holdings, Inc or any other security, you should do extensive research and get counsel from a financial advisor. You may research the latest company news, financial statements, analyses, bond performance, credit rating changes, etc.
I’ll address some of these concerns in the following paragraphs.
Financial Industry Regulatory Authority Arbitration
You might want to consider filing a FINRA arbitration lawsuit against your brokerage firm if you lost money investing in GWG L bonds. This is the quickest and most effective approach to settling a dispute without going to court.
Regarding financial disputes, nobody knows more than FINRA, the Financial Industry Regulatory Authority. They provide a third-party report on the selection of arbitrators in the financial sector and oversee the industry’s arbitration practices.
The GWG L Bonds FINRA arbitration is intricate because it involves the corporation, many brokerages, and hundreds of bondholders. For instance, the L bond represents illiquid, high-risk corporate debt with a low probability of principal return.
Broker-dealers that offered GWG L bonds to retail investors are under investigation by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). These are highly speculative, illiquid investments. As much as 80% of the initial investment could be lost if the investment is held until maturity.
Those who have invested in GWG L bonds may want to consider bringing a claim for FINRA arbitration against their broker-dealer through the Financial Industry Regulatory Authority (FINRA). Compared to going to court, this option may save time and money. If you still can’t get your money back, you can still go to court and submit a claim.
Investments made by broker-dealers on their client’s behalf must be appropriate for them. Their advice must be sound and in accordance with FINRA’s standards to be credible.
The L bonds were sold to investors by GWG Holdings, an alternative asset management firm based in Dallas, Texas. High-yield bonds backed by insurance contracts were issued. The bond interest was due in February, but the business has not paid it.
You may wish to consider taking legal action against your broker if you purchased GWG L bonds. To help you settle your claim, FINRA offers an arbitration process. It can be completed far more quickly than a court case, and it doesn’t affect your ability to declare bankruptcy.
The Financial Industry Regulatory Authority recommends filing an arbitration claim as the best method for resolving disputes with a broker. FINRA will investigate your claim and let you know if you are entitled to any compensation.
Legal proceedings taken by the SEC
GWG Holdings Inc., a Dallas-based alternative asset management firm, is the subject of an SEC inquiry into the company’s sales practices. It’s been claimed that it goes against the Regulation Best Interest provision that demands brokers tell their clients everything they need to know about the items they sell.
The L bond is GWG’s most well-known offering. The potential return is substantial with relatively low risk. The SEC claims, however, that the business sold the bonds to retail investors without a reasonable basis for believing the products were in their best interests and that the investors lacked adequate information to make an informed decision.
The Securities and Exchange Commission (SEC) alleges that Western International Securities, its registered representatives, and others made false and misleading promises to retail investors regarding the safety of L bonds. They also failed to observe the best interest criterion and failed to make regular interest payments on GWG L Bonds.
Resignation of the Auditor
The independent auditor of GWG Holdings, Inc., has resigned, citing financial difficulties. The corporation has been under scrutiny since October 2020, when it was supposed to file its 10-K with the Securities and Exchange Commission. The Securities and Exchange Commission (SEC) demanded evidence and records from GWG in October as part of an ongoing inquiry.
Over US$2 billion in debt and $1.5 billion in bonds are owed by GWG Holdings. Furthermore, its assets are valued at $3.5 billion. Among its key assets is a company that invests in life settlements. However, most of its assets are owned by affiliates that did not file for bankruptcy.
Loan financing for secondary alternative assets has been a fundamental aspect of GWG’s overall business strategy. Former GWG chairman Brad Heppner’s new company, Beneficient Company Group LP, has received at least $230 million in funding from the firm.