SSEK Law Firm Investigates Investors’ Losses From GWG L Bonds Sold By Aegis Capital, Emerson Equity, and Many Others
Deadline for GWG Holdings to Pay L Bond Investors $13.6M is Fast Approaching
Our investment fraud lawyers are speaking with investors who suffered losses in GWG L Bonds. These private placement, high-yield junk bonds were issued by GWG Holdings, Inc. (GWGH) and may have been marketed and sold by many broker-dealers, including Aegis Capital, Emerson Equity, and others.
GWG L Bonds have been available since 2012. However, their sales have been put on “pause” after being reinstated in December 2021 after a suspension of several months. Formerly called Renewable Secured Debentures, it was renamed L Bonds in 2015. GWG Holdings launched a new offering made up of its secured debt known as the Liquidity Bond 2020.
GWG Holdings is a Texas-based alternative asset firm and investor in life settlements. On January 18, 2022, GWG notified the US Securities and Exchange Commission (SEC) of a drop in L Bond sales in new filings. Due to this, it was unable to pay about $10.35M in interest and approximately $3.25M in principal payments owed to investors. The alternative asset firm has 30 days to complete these payments or default.
Today, please contact us at Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com). For over 30 years, we have helped investors of alternative investment products pursue damages against their brokers and brokerage firms.
Hundreds of Millions in Net Losses, Inaccurate Financial Statements
The delay in payments is not the first sign of trouble involving GWG Holdings. In October 2020, SEC’s Division of Enforcement sent the company a subpoena asking for documents because it was conducting a non-public, fact-finding investigation mostly related to GWG’s investment products. The SEC has since sent more subpoena requests.
Also, the alternative asset firm has yet to file its annual report for the year concluding on December 31, 2021. It has still not submitted another form due at the end of March 31, 2021. In August 2021, GWG announced that its board of directors had concluded that certain previously-issued financial statements might be unreliable. These include its yearly report at the end of 2019 and the first three quarterly reports for 2020.
In its Form 10K submitted by GWG for 2020, the company acknowledged net losses from operations for that year, as well as for 2019. These losses totaled $208.5 million and $151.5 million, respectively. A press release issued by the financial firm in early December 2021 admitted to net losses of $169.8M during the year’s first three quarters.
GWG Holding’s independent auditor, Grant Thornton, resigned in December 2021.
GWG L Bonds
This unrated life insurance bond is used to help pay for life insurance settlement contracts and their premium payments on the secondary market. L Bonds seek to give a higher yield to a lender in return for them willing to hold the risk that an insurance policy premium or the benefits may never be used.
These risky, illiquid, and complex investments cannot be resold on the secondary market, and shareholders must wait until their maturity to redeem the principal. The bond cannot be redeemed before the maturity date or the original policyholder’s death or disability. The prospectus notes that redeeming the bond for any other reason will result in a 6% penalty.
Seasoned Securities Law Firm
Our GWG L Bond investment attorneys are experienced at going after even the largest firms on Wall Street on behalf of our clients. L Bonds are not for most retail investors, including inexperienced investors, retirees, and those who cannot or do not want to take on much risk.
Unfortunately, the unsuitable recommendation of L Bonds to investors may have occurred. Financial advisors also may have misrepresented or omitted the risks when marketing these alternative products to customers. Call SSEK Law Firm at (800) 259-9010 today.