SSEK Law Firm is Representing Investors Against Centaurus Financial
In a recent InvestmentNews column, reporter Bruce Kelly discussed how broker-dealers and their financial advisors continued selling L Bonds to customers despite indications of possible troubles at GWG Holdings, Inc. In April 2022, the alternative asset firm filed for Chapter 11 bankruptcy protection.
The firm sold $1.6B in life insurance-backed bonds through over 140 regional brokerage firms and managing broker-dealer Emerson Equity. It is unknown what value these high-yield bonds still have or if they are worth anything at all now. Visit our L Bonds and GWG Holdings, Inc. pages to find out more.
Centaurus Financial is one of the brokerage firms that has come under scrutiny for selling these speculative, illiquid products to customers. According to Kelly’s column, in an April 2020 letter, a financial advisor disclosed to their customer that the brokerage firm had raised its maximum for how much in L Bonds it could sell clients. The increase, which had been $100K or 10% of a customer’s net worth, had gone up to $150K.
This greater sales cap came even after GWG Holdings had just disclosed that it was experiencing accounting problems in a regulatory filing. Centaurus Financial and other regional brokerage firms split up to 8% in commissions with Emerson Equity for selling L Bonds to customers.
Already, our securities lawyers are representing several investors in Financial Industry Regulatory Authority (FINRA) arbitration against Centaurus Financial. Contact us today at Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com).
Broker-Dealers Should Have Known About GWG’s Regulatory and Cash Woes
From 2018 to 2020, L Bond sales grew, with yearly reports disclosing an increase in proceeds:
- $265M in 2018;
- $403.4M in 2019;
- $440.2 in 2020.
In Kelly’s column, forensic accountant Gordon Yale is quoted as stating that the main reason GWG Holdings even existed since 2015 was to get people to purchase L Bonds. This was the firm’s primary capital source.
Investors have since claimed that they were never informed that GWG allegedly stopped investing in life insurance policies to invest in The Beneficient Company Group, LP. Former GWG Holdings Chairman of the Board Brad Heppner is that company’s founder and CEO. In November 2021, Beneficient Company Group announced its separation from GWG Holdings.
In February 2022, GWG defaulted on $13.6M in payments and interest that it owed investors. This happened just two months after its auditor, Grant Thornton, resigned. The company recently disclosed that it would be late submitting its yearly report for 2021. The firm was also late submitting regulatory filings over the past few years.
Investors File GWG Holdings L Bond Claims in FINRA Arbitration
Many investors, including seniors, retirees, and other retail investors, allegedly were unsuitably sold these L Bonds and were not fully apprised of the risks. Our GWG L Bond attorneys are pursuing FINRA arbitration claims against Centaurus Financial, Center Street Securities, NI Advisors, Titan Securities, and other firms.
It is important to note that many brokers will also operate under a local firm name when marketing and selling L Bonds to customers. Contact SSEK Law Firm at (800) 259-9010 today.