You may want to take legal action if you’ve lost money through GWG Holdings (GWGH) GWG L Bonds. While the case may be difficult, it is possible to recover some of the money lost. An experienced investment fraud attorney will advise you on your options, including claims against broker-dealers for violations of federal law. Common allegations include breach of fiduciary duty and excessive commissions.
In October 2020, the SEC’s Enforcement Division served a subpoena to GWG Holdings, seeking certain information regarding certain accounting matters and the issuance of Bonds. In addition, the SEC served a subpoena to approximately 145 Broker Firms for documents related to certain bond sales practices. These documents are allegedly related to the sale of GWG’s L Bonds.
Many GWG investors continue to look at all options to try to recoup their investment losses, while GWG itself continues to be mired in bankruptcy. Investors can call Haselkorn & Thibaut at 1 888-628-5590 for a free consultation and information regarding GWG Holdings lawsuit claims. The national law firm currently represents investors.
GWGH Holdings misled investors and sold them investments they were not prepared for. This lawsuit will seek to recover compensation for investors who were sold an investment that wasn’t appropriate for them. The GWGH lawsuit is a class action, which means that many investors are eligible to participate in it. A class action lawsuit is ideal for investors because it is confidential and does not involve depositions or extensive discovery.
GWG filed for Chapter 11 protection in April 2022 in the Southern District of Texas. The lawsuit seeks to recover investors’ losses for suitability issues and other reasons. At the time of filing, the company reported $2.1 billion in total liabilities. The resulting bankruptcy could be devastating to investors.
The securities industry regulator, FINRA, has established regulations requiring investment brokers to do their due diligence before recommending any type of investment to their clients. Failure to comply with FINRA’s rules could result in recovery claims against a brokerage firm. The FINRA arbitration process is also a quick way to settle disputes and can be faster than a traditional lawsuit.
Beneficient
The Beneficient of the GWG holdings lawsuit is a business that is facing a federal class action lawsuit for defrauding investors. As part of this investigation, the Kansas Reflector interviewed Beneficient leaders, financial experts, and Hesston residents to learn more about the company’s business and its prospects for rural development. We also reviewed financial documents and public SEC filings and studied lawsuits filed in Delaware.
The Beneficient Company Group, which Heppner and GWG Holdings own, issued L Bonds to raise funds for their investment portfolios. These bonds were illiquid, high-risk investments that broker-dealers sold to investors. Investors were not fully informed about the companies’ investments. The SEC has since issued multiple subpoenas.
Beneficient has additional borrowing maturing in 2023 and 2024. December 31, 2020, had a principal balance of $2.6 million. The lawsuit also includes a provision that requires Beneficient to continue making payments on its debts until the end of the lawsuit. Beneficient will also be required to make payments under the Credit Agreement and Second Lien Credit Agreement. As a result, the Beneficient may not be able to refinance or obtain additional financing at favorable terms. Moreover, it may be restricted from making new investments and incurring additional debt.
GWG Holdings’ exposure represents the life insurance policies in the Beneficient’s loan portfolio and the underlying collateral in the Beneficient’s loan portfolio. This exposure type depends on the company’s portfolio and third-party information classification. Some exposure types include hedge funds, private debt strategies, natural resources, and long-term life insurance policies.
Emerson Equity
Emerson Equity LLC and Tony Barouti are involved in a securities arbitration dispute arising out of the sale of GWG L Bonds. These bonds are illiquid, speculative investments secured by the assets of GWG Holdings and pledged by the largest stockholders. As such, they are high-risk investments that are not suitable for everyone. However, they are available through brokerage firms which receive a commission of up to 5% of the principal sold.
Emerson Equity LLC is a registered broker-dealer and a member of the Financial Industry Regulatory Authority (FINRA). It has more than 150 investment professionals, according to its website. This firm acted as the managing broker-dealer of GWG L Bonds.
Under FINRA Rule 3110, brokerage firms must supervise stockbrokers and ensure they abide by the securities laws. According to the complaint, Emerson Equity failed to supervise Tony Barouti, who recommended GWG Holdings to his investors. These allegations may apply to other brokers who may have recommended GWG Holdings to their clients.
As an underwriter for GWG Holdings, Emerson Equity analyzed the risks associated with L Bonds. Its stockbrokers should also carefully evaluate the risks of securities before selling them to customers. They should also consider the risk tolerance of the investor. If the risk tolerance is not compatible with the investor’s risk tolerance, the stockbrokers may be liable for breach of duty.
