There is a growing concern among investors about the value of their shares. L BondsDallas-based financial service firm GWG Holdings Limited (GWGH).. Unrated, an L Bond offers a high return in exchange for a risk that premiums will not be paid. Insured parties in life contract contracts can then sell their policies on the secondary insurance markets.
The investment in the policy becomes the beneficiary after the transfer. The insurance company will receive the payment from the buyer. When the policyholder who purchased the insurance dies, the insurer compensates the buyer. Institutions are the majority of investors in this type of asset. The money earned from issuing these bond L funds will be used to make premium payments.
These types of investments can be very risky, and many investors claim that they were unaware of them. Haselkorn & Thibaut, a national investor law firm has set up a toll-free number for L Bond investors to call at Call 1-800-856-3352 to discuss loss recovery.
What is a L bond?
L Bonds are a relatively recent investment product that is purportedly designed to allow investors to finance life insurance policies. Life insurance companies sell them and they tend to have higher yields than the typical fixed-income, publicly traded bonds.
According to the prospectus that was published at the time of the bond’s issuance, the bonds had maturities ranging between 2 and 7 years and interest rates ranging between 5.5 and 8 %.
What is Life Insurance?
A life insurance contract is one that pays a lump sum to an individual, or company upon the death of another person. It is an Contract between you and a insurance company. Your beneficiaries will receive a lump-sum payment from the insurance company in exchange for paying your premiums. “death benefit”.
L Bonds – How they work
GWG’s current bond yield for two years is 5.5%, while the three-year bond yield is 5.5%. I have it. The bonds have maturities ranging from 2 to 5 years and a yield of 6.25%. Another preferred stock was issued with a convertible option, and dividend income of 7.5%. The issuer may call these bonds at any time and the payouts are based on the proceeds from life insurance plans. GWG warned investors that life insurance investments are more risky because the secondary market has not developed and does not have enough liquidity.
What are the risks?
L Bonds do not trade on a public exchange and investors cannot liquidate them in the event of a need. As there is no market, it is impossible to establish a fair value. It is best to negotiate a price for the sale if it’s possible. The realizable price is not known.
They are not publicly traded, and therefore not subject to the same regulatory scrutiny or approval process.
They may appear to offer higher returns than fixed income securities that are publicly traded, but they are speculative products with high risk. A higher return is a chimera if you can’t realize it.
GWG Holdings files for continuous offering of L Bonds
In an registration statement GWG Holdings issued a notice today of the continued sale of the company’s L bonds Each unit is valued at $1,000 per year. The minimum investment will be 25 or $25,000 The firm will use the net proceeds from these sales to expand its alternative asset exposure, and to provide liquidity to existing clients and support diversification. Under SEC rules, the offer will expire three years following the effective date. Companies may still hold similar offers during or after this period.
GWG released a new billion L bond in January 2015 after purchasing another $250M in August 2012. Subscribers received the first issue in December 2014. Bonds are usually sold at a commission rate and require a minimum investment of $25,000. According to a Congressional investigation last week, brokers who sell bonds contracts will be able buy back bonds as part of the Treasury rule. Bond sales may be boosted now that the DTC gives buyers access to larger markets.
Haselkorn & Thibaut, P.A., is investigating claims from investors of L Bonds, believe there may have been irregularities in the sale of this product and that investors are likely to incur losses. GWGH has to be prudent in managing all investments and to deliver on the promises made by the offering materials. But the fact that the company missed a recent SEC filing deadline is not a sign of good things and could mean serious financial troubles.
GWG temporarily halted the sale of L Bonds this April. The following month they were informed by NASDAQ of their noncompliance to listing rules.
If you have invested in the L Bonds offered by CWCG, we recommend that you contact Haselkorn & Thibaut today for a confidential discussion and to explore possible options for the recovery of all or some part of your money by calling 1-800-856-3352.