American Trust Investment Services Sold GWG L Bonds And Now Must Pay FINRA $266,000. Our L Bond Loss Recovery Lawyers Are Working With Investors To Pursue Their Losses
In a settlement reached with the Financial Industry Regulatory Authority (FINRA), broker-dealer American Trust Investment Services consented to pay $166K in restitution and a $100K fine to resolve allegations that three of its financial advisors violated Regulation Best Interest (REG BI) when they allegedly unsuitably recommended GWG L Bonds to investors.
GWG Holdings is accused of running a more than $1.6B Ponzi scam that cost thousands of L Bond investors serious losses.
FINRA contends that the American Trust brokers unsuitably recommended these speculative, illiquid L Bonds to customers even when they were not a good fit given the clients’ investment profiles. Among those who were impacted were two retirees, two seniors, a nonprofit, and others.
All of them had “moderate or moderately aggressive risk tolerances and investment objectives that did not include speculation.” These were investors who were inexperienced or had limited experience in alternative investments.
Yet, because of these American Trust registered representatives’ purportedly unsuitable recommendations, these investors placed about 14%-72% of their liquid worth into alternative investments, including GWG L Bonds.
While agreeing to the FINRA order, per is common, American Trust is not denying or admitting to the findings. It is unclear whether the self-regulatory organization’s (SRO’s) case involves formerly registered American Trust Investment Services broker Linda Wimsatt.
Several of her clients filed claims over L Bond losses, alleging Reg BI violations. Most resulted in settlements or are still pending.
Our Skilled L Bond Loss Recovery Lawyers and Reg Best Interest Violations
Shepherd Smith Edwards and Kantas L Bond Loss Recovery Lawyers (investorlawyers.com) is representing dozens of investors against many broker-dealers in FINRA arbitration over losses they sustained in GWG L Bonds. These risky alternative investments have long been problematic, but that didn’t seem to stop brokers from continuing to market and sell these junk bonds to customers.
The high commissions that broker-dealers were able to earn may have played a role in why financial advisors were incentivized to sell L bonds. GWG Holdings filed for Chapter 11 bankruptcy protection in April 2022.
The US Securities and Exchange Commission’s’ Regulation Best Interest (REG BI) sets up a “best interest” conduct standard for broker-dealers and their associated persons to abide by when making any investment recommendation to a retail customer.
This means that these financial professionals must act in the best interest of these clients when suggesting a securities transaction, financial product, or investing strategy. Broker-dealers and their registered representatives must also disclose any conflicts of interest, including financial incentives.
Until Reg BI was approved by the SEC in June 2019 and enforced a year later, brokers only needed to fulfill FINRA’s suitability standard when determining a recommendation’s appropriateness for an investor.
Unfortunately, it isn’t only American Trust that has been accused of REG BI violations related to the sale of GWG L Bonds. Other brokerage firms have also come under scrutiny, including Western International Securities, Moloney Securities, and LifeMark Securities.
Our Reg BI loss lawyers know how to maximize your chances for a full financial recovery. We have represented thousands of investors regarding more than 1000 matters in arbitration, litigation, negotiations, and mediation. More than 90% of our clients have achieved full or partial financial recovery.
Call our L Bond Loss Recovery Lawyers at (800) 259-9010 or fill out this form to schedule your free case consultation.