What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: March 4, 2022

Chicago-Based Stoltmann Law Offices, P.C. is a securities investor arbitration and litigation law firm that focuses its efforts on representing investors in claims seeking recovery of lost funds. We have been monitoring and representing investors who invested in various GWG bond holdings in arbitration actions against brokerage firms responsible for soliciting them too invest in GWG. Since January, GWG has failed to make interests payments to its investors in its L-Bonds and according to reports in both the Wall Street Journal and InvestmentNews, the company is now planning to file for Chapter 11 Bankruptcy protection.

Once again, GWG failed to file its annual report with the SEC because it still had not hired an auditor to replace Grant Thorton, who resigned at the end of 2021. For a public-reporting company like GWG to go more than three months without an auditor is a bad sign and means that bankruptcy is likely right around the corner. According to InvestmentNews, this filing could come as early as this week.

Stoltmann Law Offices has written previously on the issues related to the GWG bonds. Although a purported class action lawsuit is now pending against GWG, the best and surest way for investors to attempt to recover their losses, which will be substantial in the event of a bankruptcy filing, is through individual FINRA Arbitration claims against the brokerage firms responsible for selling GWG bonds to investors.  Due diligence on offering like the L-Bonds by the broker/dealers that sell these investments is of paramount importance to investors and compliance with FINRA Rules and securities regulations. Pursuant to FINRA Rule 2111, a brokerage firm cannot offer an investment to a client unless it first has a reasonable basis to believe the investment is suitable for at least some clients. This due diligence requirement has been expounded upon for many years through FINRA Regulatory Notice 10-22, NASD Notice to Members 05-26 and 03-71.  If a brokerage firm offers a security like the GWG L-Bonds without performing industry standard due diligence, then the firm can be liable for breach of fiduciary duty, negligence, or state securities act violations.  Further, even if the firm did perform industry standard due diligence, but ignored red flags that the offering was destined to fail and had no reasonable chance at success, then the brokerage firm can be liable for negligently approving the investment for sale to clients, despite the existence of red flags.

Class actions take years to make it through to settlement, if the case ever gets there, and the recovery in securities fraud cases usually averages about 7 cents on the dollar.  FINRA arbitration, on the other hand, typically takes about 12 months from start to finish and statistically, investor chances at a substantial recovery are much higher than with class actions.  There are no guarantees that any case will be successful, but statistically, FINRA investor claimants recover, on average, about 40% of their investment losses.  These odds increase if you retain experienced counsel.  The lawyers at Stoltmann Law Offices have recovered tens of millions of dollars for defrauded investors through a combined fifty years of experience in the FINRA arbitration forum.

If you are a GWG Bond investor, please contact Stoltmann Law Offices at 312-332-4200 for a free, no obligation consultation with a securities attorney. We offer representation to investors nationwide on a contingency fee basis which means we do not get paid until you do!


The posting on this site are mere OPINIONS and NOT statements of fact in any way whatsoever. The information should not be relied upon and there have been no findings made against the firms or individuals referenced on this site. In addition, this Blog is made available for educational purposes only and incorporates information from the web as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and Stoltmann Law Offices (161 N Clark Street 16th Floor Chicago, IL 60601). The Blog opinions should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


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