L Bond investors are now left out in the cold. They aren’t getting the promised income from their investments. They also have no way to realize the money they have locked up in these securities, as these are not traded alternative investments.
It was stated in the 18 th January notification that GWG sent to the Securities Exchange Commission ( SEC), that the inability of the shareholders to pay $13.6million was caused by a decrease in the sale price of L Bonds.
The Valentine’s Day letter informs shareholders of the fact that there are many options to safeguard shareholders’ interests and meet financial obligations. It also states that GWG’s assets were under review and that several restructuring options are available to “conserve or maximize the value”
Further, the letter stated that no maturity or monthly payments would be made while the process was ongoing and that it could take up to 4 weeks to make a decision.
Haselkorn & Thibaut (InvestmentFraudLawyers.com) is currently investigating GWG Holdings and broker-dealers that sold their products. For a free consultation about investment loss recovery options, including lawsuits or FINRA claims, investors can call 1-888-902-6872.
Understanding L Bonds
An L Bond, an unrated life insurance bond, is sold as a private placement. This type of investment is used to purchase and pay for premiums on secondary market-purchased life settlement contracts.
The lender (the one who bought the bonds) gets a higher yield in return for taking on the risk of nonpayment of premiums or other benefits. It is important to understand that the L Bond is not a tradeable instrument but an illiquid investment. The redemption of L Bonds before maturity or the death or disability of the policyholder results in a penalty of 6%.
Many brokerage firms sold L Bonds of GWG, including Emerson Equity and Centaurus Financial. The brokerage firms seem to have sold these illiquid investments quite indiscriminately to individuals with low-risk appetites who shouldn’t have been.
GWG Holdings’ financial position
GWG currently has $1.552 trillion in outstanding L Bonds and $327.7 million in senior credit facilities on the Balance Sheet. GWG’s tangible assets are worth only $794.7million, with $67.7m in cash and restricted cash, as well as alternative investments of up to $226.1m.
For the year ending 31 December 2020, Form K had reported net losses in excess of $530 million. There were also concerns about its ability to raise new capital, negative cash flows, and repeated losses.
GWG investors are in the recovery phase
A FINRA arbitration claim against the broker-dealer who sold you, L Bonds, is the best way to go if you are an L Bond investor. This will allow you to recover the amount you owe.
Our Haselkorn & Thibaut have experienced investment fraud attorneys who are available to speak with many people who have lost money on L Bond investments. Call 1-888-902-6872 to speak with one of their attorneys.
