What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: March 19, 2021

Chicago-based Stoltmann Law Offices represents investors nationwide who’ve suffered losses from dealing with broker-advisors who’ve sold them fraudulent investment products.

Broker-advisers should be looking out for you when it comes to the investments they sell. But sometimes they drop the ball in a big way, although they are still legally responsible to ensure that what they sell you is legitimate. Brokers across the world have been selling products from Northstar Financial Services (Bermuda). The company was known for its variable annuities, which combine mutual funds within a “wrapper” of an insurance policy. You can invest in a range of vehicles from bonds to stocks. When you’re ready to retire, you can “annuitize” the product into monthly payments. When you die, your survivors will be paid a death benefit.

Northstar filed for bankruptcy last year, leaving investors holding the bag. Lawyers have been filing claims for investors as the company is being liquidated by the Bermuda Monetary Authority. What does that mean for investors who bought the company’s annuities? The news is not good.  “Clearly now that these investments have appointed a liquidator and are being unwound investors are quickly realizing their fear that their principal may never get returned in full as promised,” noted one law firm representing investor claims. For U.S. investors, though, it’s possible to file an arbitration claim if a FINRA-registered brokerage firm sold you Northstar products.

Two brokerage firms known to have sold investment products from Northstar are Miami-based Ocean Financial Services and Hawaii based Bankoh Investment Services. Some of the products sold through Northstar and its broker/dealer network include:

  • Global VIP Elite
  • Global Advantage Plus Series
  • Global Index Product
  • Global Advantage Select

Under FINRA rules, investors can file claims against brokers for failure to supervise, misrepresentation, negligence, breach of contract, unjust enrichment and gross negligence. Older clients can also file a claim for “abuse and exploitation of an elderly person.”

Northstar paid generous commissions, bonuses and other incentives to brokers. Since the compensation to sellers is so lucrative, brokers often overlook the suitability of the investment for clients interested in preserving principal. Fees and other expenses usually make these products a bad deal for investors. This has been a perennial problem in the brokerage industry.

Here’s one warning from FINRA:

“While a variable annuity has the benefit of tax-deferred growth, its annual expenses are likely to be much higher than the expenses on a typical mutual fund. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. Instead, there is a risk that you could actually lose money.”

The nasty catch with most variable annuities is that they are loaded with layers of excessive fees, so it’s unlikely that you will earn a net return in the early years. Your dollars are also locked into the vehicle through “surrender” fees. According to FINRA, these annual fees and expenses – in addition to high commissions — can include:

  • Mortality and expense risk charges, which the insurance company charges for the insurance to cover guaranteed death benefits and annuity payout options.
  • Administrative fees, for record-keeping and other administrative expenses.
  • Underlying fund expenses, relating to the investment subaccounts.
  • Charges for special features, such as stepped-up death benefits, guaranteed minimum income benefits, long-term health insurance or principal protection.

Have you invested with brokers who have sold you money-losing or overpriced investments from shady managers? FINRA and the SEC have strict rules on disclosing risk profiles on all investments sold by brokers and investment advisers. If they fail to fully inform you of downside risk, you may have a case in arbitration.

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. Investors can file FINRA arbitration complaints if these rules are broken.

If you invested with a broker-advisor and lost money as a result, 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!


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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