Investors Should Evaluate FINRA Claims Against Firm That Sold Them GWG L-Bonds.
Published On: January 18, 2022
Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from investing in GWG Holdings L-Bonds. The company stated recently that it would miss nearly $14 million in interest payments on “L” Bonds that were due on January, 15, 2022. On Monday (Feb. 14), GWG issued a statement that “We know many [investors] will have questions, and we don’t yet have all the answers, but we are committed to finding the best path forward,” according to Investment News.
In the interim, GWG isn’t paying interest on its bonds — or dividends — on its Redeemable Preferred Stock and Series 2 Redeemable Preferred Stock. L Bonds are unrated bonds that are based on life insurance settlements. They are created to purchase life insurance contracts and have yielded between 1% and 5% of the market price as broker commissions. Yet the maturity of GWG Bonds has ranged from 2 to 7 years, yielding 5.5% to 8.5%.
“A reader of GWG’s communication would gather that they had no intention of making the missed payments even within the grace period of 30 days,” noted alphabetastock.com. “This could lead some holders of the L Bonds and trustees to accelerate their bonds, which would make them due immediately, and as a result, payable, further stretching the company’s resources. There is growing concern that this acceleration could create a ‘run’ on the company that could be financially ruinous not only for GWG but its L Bondholders as well.”
To date, GWG Holdings missed principal payments of $3.25 million and interest payments of $10.35 million in L Bonds (due on January 15th, 2022) as per the company’s latest filing with the Securities Exchange Commission (SEC). GWG also has experienced some severe difficulties with its accounting and reporting to regulators. GWG’s independent auditors, Grant Thornton LLP, resigned the end of 2021. Following that announcement, GWG stated that it “would not be in a position to complete” its Annual 10-K SEC report. GWG Holdings has been selling high-yield bonds since 2012. The 2020 offering of $2 billion in L Bonds of a value of $2 billion was sold by advisors from 127 firms.
Firms are also legally required by Finra to monitor and supervise what their brokers are selling – their investments must be vetted and authorized by the firms – and have an obligation to investors to fully reveal true risk and return information about the vehicles sold. Broker-dealers and advisors are also required to fully vet all of the investments they are selling to determine if they are suitable for your age and risk tolerance. Investors can file FINRA arbitration complaints if these rules are broken. You can often avoid rogue broker-advisors by checking their backgrounds through BrokerCheck,
If you invested GWG L-Bonds, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!
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