What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: September 23, 2021

Stoltmann Law Offices, P.C., a Chicago-based securities, investment, and consumer protection law firm offering representation on a contingency fee basis to investors and victims nationwide, is concerned about the slow drip of news coming out of Bermuda about the NorthStar Financial liquidation. Recently, investors received a letter from the NorthStar informing them about the appointment of  representatives for the various investor classes. These representatives would serve the function similar to a creditor’s committee in US bankruptcy court. These representatives would stand in the shoes of and represent the investors from each class of NorthStar investors. The Chief Judge overseeing the liquidation in Bermuda along with the group known as the “joint provisional liquidators” will ultimately choose the representatives.

Regardless of how this liquidation ultimately unfolds, investors need to realize they are looking at substantial losses on their annuities and insurance contracts. There does not appear to be assets sufficient to make investors whole, really, nowhere close to it.  As this liquidations process unfolds and crawls along through this process, investors hoping for a miracle, need to splash some cold water on their face and look to other options to recover their investment losses.

If you were sold your NorthStar Bermuda insurance or annuity contracts by a U.S.-based financial advisor, broker, or investment advisor, you could have viable claims to pursue against the brokerage firm that employed the advisor at the time of sale.  These actions cannot be filed in a U.S. Court. Instead, pursuant to the contract binding you, the investor/client, to the brokerage firm, you must submit all disputes to arbitration through the Financial Industry Regulatory Authority (FINRA).  The FINRA Arbitration process is simpler than filing a claim in court. There are no depositions and motion practice is limited, specifically, motions to dismiss which bar claims for legal reasons without being heard. In FINRA Arbitration, these sorts of motions to dismiss are greatly limited, making it easier for investors to gain access to the discovery they need from the brokerage firm to win their case.

The attorneys at Stoltmann Law Offices have represented thousands of investors before FINRA arbitrators for more than 20 years. NorthStar (Bermuda) FINRA claims focus on two key issues.  First, given the esoteric nature of the investment – an off-shore annuity-like contract – brokerage firms have obligations to vet, understand, and perform adequate due diligence on the investment before the financial advisor can sell it to a client. These obligations are rooted in several FINRA Rules and regulatory notices, like RN 10-22, NTM 05-26, and NTM 03-71. This due diligence or vetting process is the first prong of the Suitability Rule under FINRA Rule 2111.  The second part of the Suitability Rule is customer-specific. It mandates that financial advisors only recommend investments that comport with an investor’s risk tolerance, objectives, investment experience, and financial wherewithal. It is possible brokerage firms approved of these NorthStar contracts by checking boxes on a list and collecting paper, as opposed to actually digging-in and determining the viability of NorthStar. Investors who purchased these contracts were also seeking low risk and principal protection – not speculation or any high risk objectives.  Given the nature of these contracts and the off-shore status, it is likely these investments were not suitable for investors with asset protection and low risk objectives.  Lastly, FINRA mandates that firms monitor their advisor and adequately supervise their conduct with an eye towards preventing violations of FINRA Rules and securities laws and regulations.  A brokerage firm can be found liable to investors if they fail to adequately supervise their financial advisor.

If you invested in any of the NorthStar (Bermuda) offerings, do not wait. Contact Stoltmann Law Offices at 312-332-4200 for a free, no obligation consultation with a securities attorney to discuss your legal options. We are a contingency fee law firm 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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