The securities fraud firm Haselkorn & Thibaut (InvestmentFraudLawyers.com) announced several securities fraud complaints against financial advisors who sold GWG Holdings, Inc., a publicly-traded company. The FINRA complaints concern several areas, including the financial condition of the company and misrepresentation about L Bond risks. There are also allegations of late filings with Securities and Exchange Commission ( SEC), and potential lawsuits against the company filed by Emerson Equity.
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GWG Holdings’ financial position
GWG Holdings, Inc. reported $2B in total liabilities in September 2021 and $1.55B in L Bonds in September 2021. The company had $42.2million in cash on its balance sheets. This amount is less than the minimum cash runway the company requires for one year. GWG also missed its liquidity deadline on April 1, 2022, for the third consecutive year. This article will examine how GWG’s cash situation affects its ability to meet its cash requirements.
The company owes significant amounts of debt to its lenders, and has been in financial difficulties since Beneficient’s acquisition. Although it’s possible that the new owners are trying to improve the company’s financial position, it’s not satisfactory. It has filed for bankruptcy already after it acquired Beneficient Company Holdings L.P. which provided financial services in relation to alternative assets.
GWG Holdings cash flow issues are still a concern, despite the fact that the ratio of debt to equity has improved over recent years. The insurance company is insolvent and has not been able to pay interest to bondholders. As its assets are still highly leveraged, it is not clear if the company can fulfill its obligations and stay profitable. Investors may be able file a lawsuit against GWG Holdings if it fails to fulfill its financial obligations.
GWG has failed to timely file its annual financials. The company is now facing several risks, including not being able to file the L Bonds. GWG also failed to meet the SEC filing deadlines for the first quarter 2021. The company’s ineligible status could have serious negative consequences. The company also suspended the sale of L Bonds due to difficulties in filing reports with SEC. GWG has also decided to stop selling L Bonds due to delays in filing reports. With the addition of Beneficient, the company’s capital allocation strategy has changed significantly.
The company also revealed that the 2020 quarterly report was not reliable and that it had entered into a strategic asset exchange agreement with The Beneficent Company Group L.P. GWG’s financial future is uncertain because of these unreliable financials. The stock price of the company could also drop. GWG’s future prospects are uncertain and the stock price has dropped significantly.
L Bonds are misrepresented as a risk.
Many brokerage firms are legally required to make the right recommendations for investors. GWG’s L Bonds, which are highly speculative and highly liquid, were sold by many brokerage firms throughout the country. These bonds should be avoided by investors who have low risk tolerance or require liquidity. GWG Holdings could cease to be a viable business.
Investors are also concerned about the accounting records quality and the SEC violations. GWG did not file its 2016 annual report, or the related form, due March 31, 2021. GWG’s board of directors concluded that financial statements may not be reliable. If you wish to avoid losing money, investors should invest in GWG Holdings L Bonds.
GWG Holdings L Bonds can be expensive and risky, but investors might not be aware. The company actually suspended payments in January 2022, creating a February default. This is a clear example of the company’s poor due diligence. Investors need to be cautious about the company’s lack of due diligence.
GWG Holdings L Bonds are a risky investment. This is despite the fact that the company’s liabilities and assets are much larger than its assets. Investors should be aware that L Bonds have a low yield, but they can also carry risks. The White Law Group will investigate the liability of the company as an alternative investment vehicle if this is not the case.
GWG stopped selling L Bonds in January 2022. GWG retained as a restructuring advisor in order to assess their options for meeting their financial obligations. This restructuring process didn’t produce any meaningful results. According to the company’s 2019 annual report, and its eight-K filing, it failed to pay investors millions in L Bonds.
Late filings to the SEC
GWG Holdings was recently subpoenaed by the SEC for delinquent filings regarding GWG’s L bond. These high-yielding debt instruments were used primarily to finance the purchase on the secondary market of life insurance policies. GWG’s accounting practices were accused of a variety of errors, according to the complaint. The company was then required to revise its financial statements. Although the company has responded to the SEC’s request, it was not without consequences.
Investors can sometimes file individual claims against brokerages for securities arbitration. These claims do not affect a person’s ability to file a GWG Holdings Class Action lawsuit or bankruptcy proceeding. Securities attorneys can review your claims and give you legal advice about how to proceed. A securities attorney might be able help you file a claim against a broker in certain cases.
The SEC is alerted to financial problems when the company fails to file its required filings. The company has failed to file its Form 10K for the first 3 quarters of 2020 and has also missed numerous other filing deadlines. GWG’s independent registered private accounting firm recently resigned. It is hard to believe that the company isn’t in an emergency situation.
Ben LP is an investment company that provides financial services to feeder funds. GWG also owns certain interests in Ben LP. FOXO Technologies Inc is another company owned by GWG. This company develops technology for actuarial modeling of life insurance policies. Since 2007, the company has been subject to scrutiny by the SEC for late filings.
According to the SEC website the company has not submitted its 2021 annual reports nor financial statements. After Grant Thornton’s resignation as auditor, the company has yet to find a replacement auditor. GWG Holdings L bonds owners could suffer significant losses. You should consult a securities attorney immediately. They can help you recover losses and get your investments back where they belong.
Emerson Equity is the subject of a class action lawsuit
You may be able file a complaint on behalf of the broker-dealer if you bought GWG L bonds. Aegis Capital, LLC, Centaurus Financial, Inc., Western International Securities, Inc., are all listed as defendants to the GWG Holdings class-action lawsuits. These companies did not do sufficient due diligence and incorrectly recommended investments to investors.
GWG had stated that its business purpose was to invest in life insurance policies. Through its network of securities brokers-dealers, it offered L Bonds to retail investors to raise capital. GWG made a major change to its business purpose in June 2018. GWG invested in The Beneficient Company Group L.P. which is controlled by Brad K. Heppner. The expanded product range is available through the unified platform.
Tony Barouti was a registered broker with Emerson Equity LLC in Los Angeles. The investigation by the firm focused on him. The firm has also been contacted by senior investors. According to the lawsuit, Mr. Barouti failed to disclose where the money he raised went. The firm didn’t receive large amounts of the proceeds from L Bonds but it did receive a fee equal to $133 million.
A class action lawsuit is an option for those seeking to be compensated. Investment fraud attorneys are looking into whether Tony Barouti (a former FINRA-registered broker) misrepresented investment products for his clients. Emerson Equity has employed Barouti since 2017, despite these allegations.
L Bonds are a risky investment. Investors need to be aware of these risks. L Bonds are highly risky and illiquid, and the securities firm had not made their required payments. The company’s inability to pay the required payments because the funds were not liquid was a grave violation of federal securities laws. Investors who have lost money due to its products should be compensated by the company.
GWG Holdings filed for Chapter 11 bankruptcy protection within a few days. It has not been able to pay $13.6 million to bondholders since then. GWG could soon declare bankruptcy after the SEC filed a subpoena. Investors who have lost money on the L Bonds may file this lawsuit. GWG Holdings complaints regarding class action lawsuits against Emerson Equity raises a bigger question: What are the implications for GWG Holdings investors.