Claimant files FINRA arbitration claim for up to six figures in damages
A Houston, Texas investor has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against Centaurus Financial after he sustained losses in GWG Holdings L Bonds. These risky junk bonds were unsuitable for this inexperienced retail investor, yet his Centaurus broker allegedly recommended and sold L Bonds to this claimant.
GWG Holdings, Inc., which sold $1.6B of L bonds to investors through brokerage firms like Centaurus, filed for Chapter 11 bankruptcy protection in April 2022. Thousands of investors seek to recover losses in these complex, speculative, and illiquid high-yield bonds.
Our Houston GWG L bond attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) represent this investor in FINRA arbitration. He is seeking up to six figures in damages. A panel of three arbitrators will hear the case in Texas.
Senior investor alleges GWG L bond losses hampered retirement plans
This older investor, who suffers from health issues and can no longer work full-time, entrusted his Centaurus Financial broker to make suitable investment recommendations for his portfolio and risk tolerance level. Instead, the financial advisor, who has since passed away, recommended this customer invest $50K in GWG Holdings L bonds while allegedly misrepresenting them as a safe, fixed-income alternative.
Now, after losing money and impacting his funds for retirement, this claimant is accusing Centaurus Financial of:
- gross negligence;
- breach of fiduciary duty, and other allegations.
GWG Holdings was in financial trouble for some time
GWG L bonds have proved to be anything but safe. In February 2022, GWG Holdings defaulted on $13.6M of payments plus interest owed to bond investors. Before then, there were signs of financial trouble. Learn more by visiting GWG Holdings, Inc. and GWG Holdings L bonds.
By the end of 2020, GWG’s debt included more than $200M in outstanding senior debt, over $1.6B in outstanding L bonds, and other debts. All this was a 560% rise in outstanding debt to bondholders over four years. Meanwhile, the yearly cash flow required to pay ongoing premiums on L bond-related life insurance policies was supposedly over $500M annually, which was money that the alternative asset firm didn’t possess.
The US Securities and Exchange Commission (SEC) has been investigating GWG Holdings since October 2020. However, the company waited a month until after it sold another $200M of L bonds to investors before disclosing this probe to the public. In December 2021, GWG’s auditor resigned.
How do you recover losses in GWG L bonds?
Representing L bond investors against Centaurus Financial
More than 140 regional broker-dealers earned high commissions and fees from selling GWG L bonds to customers. Centaurus Financial was one of these firms. SSEK Law Firm has already filed numerous FINRA arbitration cases seeking to recover damages for their losses against Centaurus. We also represent GWG L bond investors against other broker-dealers.