GWG L Bonds FINRA Arbitration Claim Requests Up to $500K in Damages
A retired couple from Republic, Missouri, has filed a six-figure claim against Center Street Securities over losses sustained in GWG Holdings, Inc. (NASDAQ: GWGH). Both inexperienced investors with health issues, the claimants had entrusted the brokerage firm with keeping their money safe.
Instead, their Center Street Securities broker Joe Latour, a registered investment advisor with the Latour Financial Group, unsuitably recommended and sold them GWG L Bonds. He did this while neglecting to give a full picture of the risks. Now, these investors are pursuing up to $500K in damages for their losses.
In their FINRA arbitration case, the couple alleges negligence, misrepresentations and omissions, unsuitability, overconcentration, gross negligence, fraud, breach of contract, and other contentions. Our securities attorneys represent these older retirees in their Financial Industry Regulatory Authority (FINRA) arbitration claim against Center Street Securities.
If you sustained losses in these high-risk bonds that were sold to you by your brokerage firm, call Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) today at (800) 259-9010.
GWG L Bonds Were Too Risky, Illiquid, and Highly Speculative For These Retirees
At the recommendation of Center Street Securities, the claimants invested $134K into L Bonds. These investments are risky, highly speculative, and incredibly illiquid. These bonds are junior debt, unlisted, issued with 6-month to 7-year maturity dates, and callable in that GWG Holdings can repurchase them without penalty and at a loss to investors.
There is no way for someone to sell their L Bonds early. These bonds renew automatically unless the investor requests otherwise before their maturity. Over 50% of outstanding GWG L Bonds were not repaid upon maturity. Instead, they were simply replaced with another bond.
While GWG L Bonds are supposedly secured by collateral, the firm’s only assets are ownership interests in subsidiary companies. Not only that, but bond repayments to investors were like a Ponzi scheme in that they came from the sale of L bonds to new investors. Visit our L Bonds page for more details about this investment.
The claimants’ Center Street Securities financial advisor also recommended investing in non-traded alternative investments, which were unsuitable given the couple’s investing profiles, financial goals, and low-risk tolerance level. While concentrating these investors’ funds in risky alternative investments, the firm maintained that all of these products were conservative, safe choices.
GWG Holdings Has Cost Investors Millions of Dollars
This Texas-based financial services company was founded in 2006. Set up to earn non-correlated returns from life insurance assets, GWG Holdings was supposed to generate opportunities for consumers to receive substantially more value from their life insurance policies in a secondary market than they would from more traditional options. Instead, GWG Holdings has cost investors many millions of dollars.
In February 2022, GWG Holdings defaulted on the $3.25M in principal payments and $10.35M in interest it owed investors. But signs of trouble were clear even before then:
- October 2020: The US Securities and Exchange Commission (SEC) subpoenaed GWG in the wake of concerns about its accounting practices and other problems. The company didn’t disclose the probe until the following month.
- December 2020: By December 2020, GWG had sold over $200M in outstanding senior debt and over $1.6B in outstanding L Bonds and other debts. It did not file its 2020 annual report.
- April 2021: GWG discontinued issuing new L Bonds.
Center Street Had Financial Incentive To Sell L Bonds With Long Maturity Terms
Broker-dealer Emerson Equity, LLC sold GWG L Bonds to investors. However, it was allowed to solicit other brokerage firms to sell the bonds for a cut of the commissions. This is the deal under which Center Street Securities sold the GWG L Bonds to this retired couple. As a result, these investors paid 8% in commissions to the two broker-dealers.
It is important to note that GWG scaled commissions for these sales according to maturity dates. This means that Center Street had a vested interest in selling L bonds with the longest maturity dates to maximize its own revenue.
Seasoned GWG Holdings L Bond Lawyers
SSEK Law Firm offers free, no-obligation consultations to L Bond investors. We are known for representing retirees, conservative investors, retail investors, and others in pursuing damages against brokerage firms whose negligence or misconduct caused them huge losses.
Our investment fraud lawyers continue to investigate and pursue the many broker-dealers that unsuitably sold L Bonds to investors. Call SSEK Law Firm at (800) 259-9010 today.